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Enjoy Money Savings On Workman’s Compensation Insurance For Owner Builders

If you’ve decided to act as the owner builder during the construction of your dream home, you’re on track for some major cost savings over what others might pay. If you’ve never worked in construction before, chances are strong you have a lot of questions. One area that can be particularly challenging involves insuring a construction project properly during all phases. Workman’s compensation insurance in particular can be a sticking point for some. Understanding this insurance, when it’s needed and who should pay for it can help an owner builder keep a budget in check. Worker’s Comp In A Nutshell Workman’s compensation insurance is required in most business settings to protect a company and its workers from the liability that arises when injuries or illness occur. This type of insurance covers both sickness and injury that are directly job related. The coverage it generally provides includes: • Medical – Workman’s compensation insurance works in place of regular medical coverage when a sickness or injury can be directly traced to work. If an employee, for example, slips and falls, this insurance would kick in. So, rather than use a major medical policy to pay for a broken leg, worker’s compensation would make the payments to a doctor or hospital. • Wage replacement – When an illness or injury that is job related pulls an employee away from working a regular schedule, workman’s compensation insurance will kick in and replace wages. Generally, this is a percentage of lost wages and not the full amount. Still, the coverage can be a vital link for keeping an employee financially above water when reporting to work is not possible. • Disability coverage – When a worker finds returning to employment impossible because of injury or illness, a lump sum disability payment might be forthcoming if workman’s compensation insurance is in place. Workman’s compensation insurance is required by law to cover employees from financial damages that might incur due to work-related accidents or illnesses. When you act as the owner builder on a property, this is an insurance that you should be familiar with, but chances are you won’t need to purchase directly. Owner Builders And Workman’s Compensation As an owner builder the chances are strong that you will not need to purchase workman’s compensation insurance to cover workers during the course of construction on your dream home. This is good news for your budget, but you do need to make certain you won’t require the coverage. While the laws that call the shots on when workman’s compensation is needed to vary from state to state, the typical rule of thumb is that people must be directly employed by a person or company for this coverage to be needed. Since most owner builders deal with independent contractors and subcontractors, this type of coverage probably won’t be necessary for you to purchase directly. Who Should Have Workman’s Compensation On A Jobsite? While you probably won’t have to pay for workman’s compensation directly, there’s a reasonably good chance you will run into this type of coverage when hiring subcontractors. When an electrical company, for example, has X amount of workers (per your state’s laws), those employees will need to be covered under a policy. Checking to make sure your subcontractors have all the insurance coverage they need in place is a good idea before signing contracts. If you happen to hire very small firms or work directly with a sole proprietor, this type of coverage might never come into play at all. Insurance You Might Need To Pay For While you might get away without purchasing workman’s compensation insurance, there are other types of policies you will likely want to have in place as your dream home is being constructed. To make sure your home and your wallet both are properly protected during construction, look into these coverage types: • Course of construction – This coverage will almost assuredly be required by a mortgage company even if you’re acting as the owner builder. Course of construction insurance protects your investment in construction from such things as theft, fire, damage, vandalism and even liability. It covers property and people both. • Builder’s risk – This type of insurance can sometimes be built into a course of construction policy. It is common, however, for contractors to also have this type of policy in place. Builder’s risk insurance covers a contractor’s investment in a building project. This is limited to protecting the structure and materials. It does not cover people. • Other types of coverage – Before diving into building your dream home, it is smart to check local and state laws for any other types of coverage you might need on your project. It is also smart to be 100 percent certain you understand the requirements your lender has placed on the project. It might be, for example, that you will need flood coverage or even general liability. As the owner builder on your property, you will find lots of ways you can save money on the construction of your home. From cutting out a general contractor’s fees by overseeing the job yourself to actually performing some of the work personally, you will be afforded plenty of opportunities to save cash. Cutting corners by avoiding insurance purchases, however, is not the best way to go. While you might not need workman’s compensation insurance on your property, the other types of coverage needed can come in handy if the unthinkable happens.