FAQs Regarding Workers’ Compensation Insurance

I have been receiving a number of questions regarding workers’ compensation lately.  I thought this month I would address some of the more frequently asked questions.  Please keep in mind that each trucking company’s situation will differ, as will state laws.  These answers are based on a trucking company operating in the state of Michigan only.


“Must I carry workers’ compensation?” 

The complete answer depends on a number of factors, but the short answer is yes if:

1.)    You are a Michigan sole proprietor who employs for 13 weeks or more one full-time employee (other than yourself) for 35 hours or more per week or three or more part-time employees.

2.)    You are a Michigan LLC, Corporation, or Partnership and for a period of 13 weeks or more any member or employee works full-time for 35 hours or more per week, or any three partners and/or employees are employed on a part-time basis.


“My guys are independent contractors.  I don’t need to provide them workers’ compensation, right?”

The law can be very confusing regarding whether an individual is truly an independent contractor or an employee.  We highly encourage you to discuss your specific situation with your Account Executive.  One “test” that can help you to answer this question is the “IRS 20-Factors Test.”  Information regarding this “test” can be obtained by calling our office at (800) 596-TRUCK (8782.)  It is very important that you can confidently state that the individuals you work with are independent contractors, as mislabeling employees as independent contractors can have far reaching impact, including increased workers’ compensation costs, exposure to workers’ compensation claims, and exposure to lawsuits related to a number of different employment issues such as:

1.) Denial of ERISA and other benefits

2.) Denial of Workers’ compensation

3.) Denial of the Family Medical Leave Act

4.) Discrimination for failure to accommodate for a disability

5.) Failure to include the individual in your employee count, resulting in your company appearing not to be required to company with Federal or State employment laws

6.) Failure to retain proper tax forms for employees, or

7.) Confusion as to who owns the rights to work completed. 


“I am the only employee of my company.  Can I purchase workers’ compensation for myself?” 

Not if you are a Michigan sole proprietor who has no employees.  If you are an LLC, Incorporation or Partnership and have employed yourself on a full-time basis (35 or more hours per week) for a period of 13 or more weeks, then you must purchase workers’ compensation and can elect whether to include or exclude yourself from coverage.     


“What does workers’ compensation cover anyway?”

There are two parts to the workers’ compensation policy.  Coverage A is workers’ compensation and Coverage B is employer liability.  Workers’ compensation provides lost waves and medical benefits to employees who suffer job-related injuries and illnesses.  Employer Liability indemnifies employers against liability claims stating that the employer’s workplace practices or conditions led to disease, death or injury to one or more employees. 


“My employee was recently diagnosed with cancer.  Will workers’ compensation provide coverage?” 

Not unless the cancer was found to be directly related to or caused by the work the employee completed for you.  Workers’ compensation is not intended to provide health insurance for your employee.  It only responds to injury, disease or death that is directly caused by the work the employee conducted or the environment the employee was exposed to while in your employ.


“My buddy says I’ll have to pay you more money once the policy expires.  Is that true?”

As a general rule, the only time you will be required to pay additional premium is if, during the year you hire additional employees or additional employee payrolls are found at the time of the premium audit (normally immediately after the workers’ compensation policy has expired.)  This is because if the employee(s) had been injured on the job during the policy period, the insurance company would have extended the workers’ compensation benefits to him or her.  The additional premium they seek to collect is legitimately owed, as the promise to provide the benefits was always there.  The best way to prevent this from happening is to inform your Account Executive of any newly hired employees so that the premiums can be modified mid-year.  Also, making certain that you do not mislabel employees as independent contractors can prevent surprises at audit.


At the Navigator Truck Insurance Agency we work hard at being helpful, accessible and result oriented.  Do you have questions regarding your workers’ compensation policy or whether the individuals who work with you are independent contractors or employees?  Give us a call today at (800) 596-TRUCK (8782) and we will be happy to discuss your situation with you.


Until next month,


Jeffery A. Moss, ARM





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