Business Insurances Needed California

 
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Old 11-06-2017, 12:07 PM   #1
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Business Insurances Needed California


Recently relocated to CA and set up an S-Corp. I am in process of applying for my CA Contractors License. But have already started working for clients (renovation type work).
What insurances are legally required, I will speak to our broker but don't want to be talked into unnecessary 'extras'?
I will have 1 or 2 laborers working with me who I will pay via check and issue a 1099 to at the end of tax year. They will not be employees on payroll.
They unlikely have their own insurance.
Do I need workers Comp to cover them?
And then public liability to cover the client/workplace?
I want to be protected if sued and have heard horror stories of Contractors being sued by opportunists.
Thank you!

Last edited by Loel; 11-06-2017 at 12:09 PM.
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Old 11-06-2017, 12:25 PM   #2
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Re: Business Insurances Needed California


Quote:
Originally Posted by Loel View Post
Recently relocated to CA and set up an S-Corp. I am in process of applying for my CA Contractors License. But have already started working for clients (renovation type work).
What insurances are legally required, I will speak to our broker but don't want to be talked into unnecessary 'extras'?
I will have 1 or 2 laborers working with me who I will pay via check and issue a 1099 to at the end of tax year. They will not be employees on payroll.
They unlikely have their own insurance.
Do I need workers Comp to cover them?
And then public liability to cover the client/workplace?
I want to be protected if sued and have heard horror stories of Contractors being sued by opportunists.
Thank you!
Federally, if the laborers are truly independent contractors then you do not need to have worker's compensation on them but you need to determine that they are independent contractors. If they are statutory employees then you need to carry worker's compensation. Here are a couple of links:

IRS definition of Independent contractor. https://www.irs.gov/businesses/small...ed-or-employee

Statutory employee and worker's compensations:

https://www.workcompconsultant.com/b...nsation-audit/

As far as liability, I can not answer that for your state but being a contractor, even if it isn't required, I would absolutely purchase liability insurance. The cost of liability insurance would definitely outweigh the cost if you were sued. Plus if you decide to do any type of insurance work or if you plan to subcontract with anybody, most of them will require you to have liability insurance. Unfortunately, I have seen what happens when a customer believes that the work was not done to their expectations even though it has been. It's not pretty!!

Disclaimer: I am not an attorney or insurance broker these are just my opinions.

Just my .02 cents

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Old 11-06-2017, 12:49 PM   #3
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Re: Business Insurances Needed California


So, if I have a Sub Contractor (someone working for me and paid hourly, but no contract, benefits, no guaranteed regular work, just as needed), and they damage a clients house, does my General Liability insurance cover damage caused by them? Or if they fall at work and need Medical treatment and try to sue me?)
Is workers comp needed to cover them? It's a costly insurance to have but what's it's purpose?
Thanks.
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Old 11-06-2017, 01:05 PM   #4
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Re: Business Insurances Needed California


Quote:
Originally Posted by Loel View Post
So, if I have a Sub Contractor (someone working for me and paid hourly, but no contract, benefits, no guaranteed regular work, just as needed), and they damage a clients house, does my General Liability insurance cover damage caused by them? Or if they fall at work and need Medical treatment and try to sue me?)
Is workers comp needed to cover them? It's a costly insurance to have but what's it's purpose?
Thanks.
Disclaimer: I am not an attorney nor do I claim to be it is best to consult an attorney these are just my opinions

First of all, make sure that they are indeed subcontractors via the IRS regulations if they are not and you are classifying them as subcontractors (independent contractors) you can get into a lot of financial trouble.

From what I understand (please read disclaimer), please correct me if I am wrong, if you hire a subcontractor and they damage something at a clients' house, because the construction contract is between you and the client, it falls back on you and you will have to file a claim with your insurance company. However, if you get a claim filed against you for a screw up of your subcontractor, you can then file a claim with your subcontractor's insurance and let your insurance companies duke it out. If they do not have insurance then you may be SOL and have to eat those costs.

Worker's comp is strictly for if your employees get injured, basically it is protection of employees. If they are taking risks, such as getting on a roof, and they fall off that roof and get injured, it is their guarantee that you will cover the medical costs. I am not sure what would be charged if they get hurt and then sue you for the injuries, as I am not an attorney or insurance broker.

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Old 11-06-2017, 11:40 PM   #5
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Re: Business Insurances Needed California


You lost me at "they will be working with me...." true independent Subs chose when they work, one of the six IRS tests......


True 1099s work as they chose, NOT as directed constantly by a supervisor.

If you can't pay the required Workman's Comp as required under the California law, Don't even start your business.....

If you think businesses are greatly damaged from unneeded laws and regulations, support the political parties that want less regs and laws and MORE wealth for everyone...... Change the silly laws, don't break them.

Profits with out risk is called charity or maybe theft of required payroll insurances & taxes.

Only the mathematically challenged and tax illiterate would consider moving to California to start a small business, unless it pandered to some sort of Eco-Nutter scheme that benefits from massive state transfer payments.... E-Cars, Solar, wind mill scams etc....

Last edited by Fouthgeneration; 11-06-2017 at 11:47 PM.
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Old 11-08-2017, 07:16 AM   #6
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Re: Business Insurances Needed California


You are doing renovations without a license and want to shaft some poor laborers by 1099ing them and you want tips on how to cover your ass? Good luck.

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