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Old 07-24-2002, 08:14 AM
HOMER HOMER is offline
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Join Date: Jan 2000
Location: Alabama the Beautiful
Posts: 3,183
w/c and bonding

Got 2 problems.

I am neither bonded nor do I have workmans comp ins. I have no employees so the w/c is not needed, in my opinion.

I have been given an opportunity to add an additional $2000.00 + per month to my bank account but the company requires the contractor to have w/c. My question is can you get it even if there is no employee to cover. I know it's based on payroll, what if there is no payroll? Alabama law says I don't need it unless there are 4 or more employees (I think that's correct). How can an out of State company make me carry this when it's not needed? And who is it covering anyway? How would it benifit them?

Problem # 2..............

I have another opportunity to add an additional $900.00+ per month to my account but........this particular company says I have to be bonded and carry $1,000,000.00 in general liablitly ins. The insurance isn't a big deal, I just have to up my coverage from $300,000.00 but what's up with the boding? I thought that was to cover them from theft. What does it cost to be bonded and who does that benifit?

When folks say it takes money to make money they weren't jokin'! I sure could use these 2 accounts but I'm a little confused here.

Advice?
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Old 07-24-2002, 10:19 AM
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Hawkeye5 Hawkeye5 is offline
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Location: Hendersonville, TN
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Homer: Companies may require anything in their sub-contractor agreements, even it is unreasonable. The company may be responsible for the injuries sustained to any uninsured sub-contractor's employee if that employee is injured on their property while working. The drafters of the sub-contract agreement are only trying to protect the companies assets. In short, that's the "why". They don't care that you have no employees. Contact your agent and see how much a minimum premium workers compensation policy will cost. Should be in the $100 to $250 range, but may depend on your legal form of business. Could cost more if you are incorporated.
There are two broad classes of Bonds: Fidelity, which addresses dishonesty, and Surety, which addresses performance. They may also be refering to the bond states require of licensed applicators, but I don't know. Your agent can help you with a performance bond also. The basic idea is that if you are financially unable to perform or finish the work, the Surety will step in and have the work completed. JD
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Old 07-24-2002, 10:20 AM
bruces bruces is offline
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Join Date: Jun 2001
Location: Independence, MO
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Just a guess, but?

As far as the work comp goes, many companies will require their subs to carry work comp (for example, construction jobs). If the sub doesn't have w/c the general will cover the sub for the work comp and charge them back. They don't care if he has employees or not, they just require w/c coverage. They probably are requiring you to have work comp in case you got hurt working on their property.

This sounds like this type of scenario. Talk to your insurance agent, they should be able to help you out here. I know it doesn't make sense, but that's big companies for you.

The bond is probably a performance bond. Again, in a contracting scenario, the bond is a guarantee that the job will be finished. A bond is posted on a construction project, the contractor goes broke, the bond is used to hire someone to replace them and finish the job.

How this applies to mowing, beats me. I suppose this could be a surety (theft) type bond if you are going to be on their property or have access to areas where property could be stolen or damaged, but doesn't seem likely. The bond is usually more trouble to get than general insurance.

I would try to talk to someone at the companies and determine exactly what they want. Maybe these are standard clauses that can be worked around.

Once you find out, talk to your insurance agent. If they handle commercial insurance, they should be able to help you with the w/c and the bond, or refer you to someone who can.

Finally, if you have to meet these requirements, you'll have to look at the cost vs. the size of the contracts.

Sounds like either would be worth spending some money to get.

Good luck.
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Old 07-24-2002, 03:52 PM
HOMER HOMER is offline
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Thanks for the info, cleared things up a bit. I'll post when I get some 411 from the ins. company.
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