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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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Old 11-30-2017, 01:43 AM   #7
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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!
Just a CA contractor here, not an attorney so Im not giving legal advise but..

General liability insurance is a must
State mandated bond is a must
W/C insurance is a must with employees

and those laborers WILL be employees, you WILL need W/C insurance policies to cover them. Here in Cali, the contractors board, state EDD and OSHA regulary make stops at job sites and you definitely dont want to get BBQ'd by those guys. But welcome to Cali!
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Old 12-09-2017, 12:09 PM   #8
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Re: Business Insurances Needed California


My understanding is if they don’t have a license, then they are your employees. If they do have license than they need to have their own insurance and you need to be listed as an additional on their policy ( your insurance can rent claim if you hire a sub that causes damage with no insurance)
When you say restoration, are you speaking water damage and such?



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Old 12-10-2017, 10:16 AM   #9
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Re: Business Insurances Needed California


Welcome to the most over-regulated state in the country. I've been in business in California for 50 years and back in the day when sales tax was 1-1/2% and worker comp was less than 5% this was the best place in the world.

Most new businesses are going to pay 18%+ of gross payroll for worker comp and 2% to 3% of gross sales for general liability. Then, we have crazy business licenses for most cities. The lowest annual fee is about $150, some cities like Los Angeles take a percent of gross sales for work done in that city and some cities are $450. You need a business license for every city you work in.

Then, you have crazy permit fees. The lowest fees for simple jobs like installing a water heater is about $80 and when we replace water pipes or drain pipes in a house some cities like Inglewood get up to $500 just for the permit.

You had better get a California handbook about employee rights, laws and believe what you read in the book. California is the only state where no federal laws are good enough. California makes additional laws and requirements for everything.

When running my business, I spend about 40% of my office time making sure that I run my business according to employees' rights laws. In the past two years my company has 11 lawsuits for fraudulent post-termination worker comp cases and two more post-termination lawsuits for wrongful termination, backpay, not giving employees bottled water, lunch breaks, shade from the sun and the works.

This state is so bad for lawsuits my current employees constantly receive telephone calls from what they call Cappers. Cappers are scumbags who call my current employees and tell them they they should get a free consultation to see if the owner of the business is violating some of their rights and they tell the employees that they get several million dollars from some employers and that is true. Recently, a carwash paid out $1.5 million because they made their employees get their drinking water from a garden hose (if that is even true).

It is expensive, but the most important insurance you need is a policy that covers employee's rights and discrimination.

Even if you hire subs you need insurance because even though you could have a legal independent contractor relationship you will get sued for alleged injuries and even if you are 100% legal you still have to answer the lawsuit the same as if your sub was an employee because when it comes to whether or not you are right nobody cares and THE PERSON WHO SUES ALWAYS WINS whether they are right or wrong.

I have a case going on right now where I terminate the employee in August 2016. The employee just filed a lawsuit in the court on December 4, 2017 for discrimination. The statute of limitations to file the lawsuit is 1 year and it has been about 16 months, but even though the employee is past the statute of limitations I still had to pay an attorney a $5,000 retainer to answer the complaint. Then, my attorney tells me that we will try to settle with the plaintiff for $5,000 to $15,000 (of my money) to avoid going through the court system that will cost $80,000 to $100,000.

I feel like leaving California every day and always wonder if the grass is greener where the Wizard of Oz lives, in Kansas. Or was, Oz some other place and Dorothy lived in Kansas?

The lawsuits against my company are not isolated. Thousands of companies with more than a handful of employees is getting put out of business because of fraudulent worker comp cases. Their are huge billboards throughout the entire city and every bus has ads placed by scumbag attorneys telling employees that they should get a consultation because they may have millions of dollars owed to them for violations the employees are not aware of.

You cannot have a roofing license without worker comp insurance even if you hire independent contractors and the worker comp rate for roofers is about 40% of the gross payroll.

Last edited by daffysplumbing; 12-10-2017 at 10:33 AM.
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Old 12-10-2017, 10:18 AM   #10
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Re: Business Insurances Needed California


Pcplumber. Welcome back


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Old 12-10-2017, 11:52 AM   #11
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Re: Business Insurances Needed California


Now you are recorded on the InterNet here seeking advice on how to avoid paying legally due fees and mandates.......ooops

That would look really bad in the penalty phase of either civil or criminal court....

And honest contractors often alert the authorities and ambulance chasers to scofflaw....

Get a spread sheet and compare the states, contact the US chamber of commerce to rank the states of business friendliness.
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Old 12-10-2017, 02:22 PM   #12
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Re: Business Insurances Needed California


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Pcplumber. Welcome back


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Old 12-10-2017, 03:50 PM   #13
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Re: Business Insurances Needed California


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Welcome to the most over-regulated state in the country.

California is the only state where no federal laws are good enough. California makes additional laws and requirements for everything.

not giving employees bottled water, lunch breaks,


I feel like leaving California every day and always wonder if the grass is greener where the Wizard of Oz lives, in Kansas. Or was, Oz some other place and Dorothy lived in Kansas?


You do realize That regardless of what state you operate in you are required to provide all employees with an adequate supply of potable water right?

If you’re that unhappy with California then leave


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Last edited by Windycity; 12-10-2017 at 03:54 PM.
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Old 12-10-2017, 05:32 PM   #14
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Re: Business Insurances Needed California


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Who is Pcplumber?


Someone who was a member and owned a large plumbing business for many years.


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Old 12-18-2017, 11:08 PM   #15
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Re: Business Insurances Needed California


daffysplumbing is right on the mark.

But one more point: be very, very careful with so called "independent contractors". These folks really need a separate business, with a legit business.

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