Hiring subcontractors? Great. Just make sure their insurance paperwork is as ready to work as they are.
Nobody starts a construction project thinking, “I hope I get to spend my Friday hunting down insurance certificates.” Yet a few minutes of paperwork before the job begins could save you a very unpleasant surprise later.
First, Why Have Workers’ Comp?
Accidents happen, even to the careful people. A ladder slips. Someone throws out their back. A nail gun has a very bad day. Workers’ compensation helps pay for covered work-related injuries, including medical care and lost wages, while providing important protections for employers.
For businesses required to carry it, workers’ comp is not optional. Even when you rely on subcontractors, it deserves a spot on your checklist.
“They’re 1099s. Isn’t That Their Problem?”
Not always. In Kansas, a contractor can sometimes be responsible for workers’ comp benefits involving a subcontractor’s employees. Calling someone a sub or paying them on a 1099 does not automatically make that responsibility disappear.
Here’s the other surprise: If your subcontractors do not have their own workers’ comp coverage, your insurance company may include some of what you paid them when calculating your premium at audit time. That $75,000 subcontracting bill could come with an extra insurance bill. Nobody ordered that add-on and yet the carrier can and likely will tag it on!
The Subcontractor Checklist That Can Save You Money
Want to avoid paying workers’ comp premium for work that your subcontractors have already properly insured? Make these five habits part of every job when you hire subs:
1. Get the certificate before work starts. Ask for a Certificate of Insurance (COI) showing workers’ compensation coverage. A general liability certificate by itself is not enough.
2. Check what it actually says. Make sure the policy dates cover the job and the correct business is listed. If anything looks odd, ask the issuing agency to verify coverage. A certificate is proof of what is reported, not a promise that every person or injury is covered.
3. Save it where you can find it. Keep certificates organized by subcontractor and job. When audit season arrives, you want a folder, not a scavenger hunt.
4. Ask questions when there is no policy. Some solo subcontractors may qualify for an exemption. Kansas has an Affidavit of Exempt Status for certain situations, but that form is not a universal get-out-of-premium-free card. Ask your agent what documentation your insurer will accept before work begins.
5. Watch for the growing crew. The person who worked alone last month may show up with three helpers this month. Make sure the people doing the work are properly accounted for and request updated paperwork when things change.
There is a real payoff here: Kansas law generally prevents a contractor from being charged workers’ comp premium for liability a subcontractor has already properly secured under the applicable statute. The key is confirming the coverage and having the records to back it up.
What If You Skip Workers’ Comp Entirely?
That can get expensive fast. In Kansas, most non-agricultural employers with more than $20,000 in gross annual payroll are required by law to carry workers' compensation insurance, although exceptions apply. However, just because your payroll falls below that threshold doesn't mean you should skip the coverage. The law may not require you to carry it, but an injured employee can still leave you facing a very expensive bill. Medical expenses, lost wages, and potential lawsuits can add up quickly, even for a business with just one part-time employee.
Workers' comp isn't just about checking a legal box. It's about protecting your employees and the business you've worked hard to build. The goal is to make sure you have the coverage you need, understand your responsibilities when hiring subcontractors, and avoid paying for exposure that's already properly insured elsewhere.
Let’s Make Audit Season a Little Less Exciting
At Shepherd Insurance Group, we help business owners sort out workers’ comp requirements, subcontractor paperwork, and those delightful annual audits. Whether you have employees, subcontractors, or a little of both, we can help you ask the right questions before a problem shows up.
A few certificates today can mean fewer headaches tomorrow. We think that is a pretty good trade.
Important note: This is general Kansas insurance information, not legal advice. Worker status, statutory obligations, insurance company audit rules, and actual coverage depend on the circumstances and policy terms.
Kansas references: K.S.A. 44-503; Kansas Department of Labor Workers Compensation Division; Kansas Insurance Department Affidavit of Exempt Status.