Workers Compensation Insurance Advisory

August 8, 2013

Mr. Scott Ghertner
Ghertner & Company

Our agency often provides a minimum premium worker's compensation
insurance policy to an association with no specific estimated payroll exposure. This should be considered an excess or fail safe policy in case any small tradesman or temporary labor were hired without the appropriate insurance.

The Tennessee Department of Labor governs worker's compensation, and the intent is to have all workers in the contracting classes protected.
In the property management field, two payroll classes generally apply for any employees. First, code 9012 is assigned primarily to clerical and outside sales staff and others engaged in property management activities.

Code 9015 applies to care, custody, and maintenance of premises. Thus, minor contracting work can often be included in this class, which will generally carry lower rates than general contractor classes, such as carpentry, plumbing, roofing, etc.
We strongly recommend anyone hired by the Association or Ghertner and Company provide their own worker's compensation policy and provide a certificate of insurance before commencement of work.

Worker's compensation policies are subject to audit at expiration, and all 1099's must be provided along with certificates of insurance. Otherwise, a premium charge will be incurred for all labor not covered. The rate charged will be determined by the work performed, but Code 9015 is often the lower rate that can be used.
We are glad to discuss this important coverage at any time.

Robins Insurance Agency, Inc.
Bruce C. Robins, CPCU, ARM, CIC

July 11, 2013

Mr. Scott Ghertner
Ghertner and Company
50 Vantage Way, Ste 100
Nashville, TN  37228

Dear Scott,

With the implementation of the Tennessee worker’s compensation law for contractors, many small contractors are opting to exclude themselves from worker’s compensation coverage in order to save money.  It is very important to collect a copy of the state exemption from the contractor and be sure the contractor doesn’t have any employees.  A family owned business can exempt up to three family members under the law and and proof of exemption should be obtained for all three.  If the contractor has even one employee then he must purchase worker’s compensation insurance unless he is doing work directly for a homeowner.  If you do not obtain an exemption form then you must collect a certificate of insurance showing proof of worker’s compensation or their 1099 payroll will be included the Homeowner’s Association’s workers compensation audit and the Homeowner’s Association may experience negative losses as a result.  It is also important when issuing a 1099 that labor cost be separated from  materials cost for each job or the total cost will be picked up at audit.

Our agency recognizes that Ghertner manages many condominium and homeowner association communities that operate under their own legal entity name.  As has been our agency practice for many years, we recommend each association or entity purchase a separate worker’s compensation policy with payroll on an “if any” basis.   This policy will protect the Association in the event a property hires someone to do work rather than going through the property management company.  This will also serve to protect in the event a contractor allows his coverage to lapse and has an injury while working for the property. 

I hope this helps clarify the new law as respects your operations and we would be happy to answer any questions you may have.


 James A. Rothberg