Contractors and Workers' Compensation Insurance in Ilinois
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Although the general rules for computing Workers'
Compensation insurance premiums are the same for
contractors as they are for other kinds of employers,
there are also some important differences that apply
only to those employers who perform construction work.
For one thing, multiple classifications often can be
applied to the same worksite (unlike other kinds of
employers, where typically a single governing
classification applies to all non-clerical or non-sales
work). For those in the construction classifications,
the payroll of a single employee can even be divided
between more than one classification code (and thus more
than one rate) as long as accurate payroll records are
kept that allow exact allocation of payroll among the
different classifications. Estimates are not acceptable.
That is, it will generally not be accepted by your
insurance company if you estimate that 10% of the
worker' time is spent in one kind of work, such as
painting, and the rest of his time is spent in
carpentry. Records of exact time spent in each kind of
work must be kept.
Illinois, like many other states, also has a special
premium credit, called a contractor's credit, that can
reduce premiums if the employer's average hourly wage is
relatively high. Unlike the experience modification
factor, however, this credit is not calculated
automatically for an employer. To obtain it, the
employer must fill out a payroll report and send it down
to NCCI. In Illinois, to be eligible for a contractor's
credit, the employer must have an experience modifier of
1.00 or lower.
Although many in the insurance industry may tell you
that if you miss the filing deadline for the
contractors' credit it cannot be obtained retroactively.
But A.I.M. has often been successful in obtaining
substantial retroactive contractors credit adjustments
for clients.
Contractors in Illinois must also be aware of the
so-called Kotecki exposures that have been created by
court decisions in Illinois.
You can find more information on this subject in
The Ultimate Guide to Workers' Compensation Insurance,
or call AIM at 1-800-288-9256 or email
aim@cutcomp.com.
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