Workers’ Compensation Insurance is one of the most misunderstood coverages in the construction industry—especially in New York, where regulations are complex, enforcement is strict, and penalties are severe. Whether you’re a GC, specialty contractor, or a small start-up crew trying to stay compliant, here are the 10 most common questions New York contractors ask about Workers’ Compensation insurance—along with clear, practical answers.
(For a more detailed answer to a question feel free to Contact Gary Wallach anytime 914-806-5853. We help everyone!)
1. If my employees work out of state for weeks at a time, but only New York is listed under Item 3A on my policy, are they covered?
Maybe—but coverage may be severely limited, depending on the state.
Workers’ Compensation is jurisdiction-based. If Item 3A only lists New York, your policy guarantees WC coverage only under NY law. If employees travel to other states such as NJ, CT, PA, MA, or FL—even for short-term jobs—you may run into:
- No coverage under that state’s WC system – You will be financially liable for difference in payment levels
- Fines from the other state for failing to secure coverage
- Penalties for uninsured labor
- Forced to secure a separate WC policy in that state
To avoid this, you must either:
✔ Add appropriate states to Item 3A or ✔ Add “Other States” coverage under Item 3C (where allowed)
Never assume NY coverage automatically follows you across state lines.
2. If I receive a penalty notice claiming I didn’t have Workers’ Comp, but I did have employees, what should I do?
Do not ignore it—NY assessments can reach tens of thousands of dollars, and the longer you wait, the worse it becomes.
Here’s what to do:
- Respond immediately to the Workers’ Compensation Board.
- Provide proof of coverage (policy, certificates, payroll reports, declarations pages).
- If you were uninsured, contact a specialist immediately—a negotiated settlement may be possible.
- Explain payroll and operations clearly to reduce the assessed period.
Delays often trigger aggressive collections, liens, and even stop-work orders. Fast action = best outcome.
3. If I exclude myself as an owner from WC coverage, but I’m injured in a car accident driving back to the office from a job site, am I covered?
Not by Workers’ Comp—because you excluded yourself.
However, you may have coverage from:
- Auto No-Fault insurance – typically covers basic medical expenses regardless of fault.
- Your health insurance – will usually cover the rest, but may ask whether this should be a Workers’ Comp claim.
The more complicated question is: Was the trip work-related? If yes, and you excluded yourself, you knowingly gave up those benefits—including lost wages and lifetime care benefits that only WC provides.
Many owners unknowingly expose themselves to massive gaps by opting out. At minimum, review the risk carefully.
4. If I hire a day laborer and they get hurt, are they covered under my WC policy?
Almost always: yes.
New York views temporary, part-time, and even casual laborers as employees for WC purposes. Even if someone works one hour, they can qualify for benefits. If you pay cash, use 1099, or claim someone is “not really my employee,” the state will almost always rule against you.
If you hired them, directed them, or benefited from their work → your WC policy is responsible.
Failing to disclose this payroll during audit can:
- Increase premium
- Create large audit bills
- Trigger fraud accusations
- Lead to stop-work orders
When in doubt, treat them as employees.
5. Why do insurance companies not want to insure contractors who sub out most of their work?
Simple: risk transfer issues and fraud prevention.
Carriers prefer contractors who perform the majority of their own labor. When a contractor subcontracts 80–100% of work:
- They often have less control over jobsite safety
- Higher risk of uninsured subs
- Greater frequency of claims filed against the GC
- Inconsistent payroll reporting
- Potential misuse of “paper GC” structures
Insurance companies want predictable, controllable exposure. Heavy reliance on subs = unpredictable exposure = carriers decline the account.
6. Why are my Workers’ Comp audits always so high?
New York audits payroll on an actual payroll basis—not estimated. Most contractors underestimate payroll when binding the policy, causing:
- Surprise audit bills
- Reclassification of employees
- Inclusion of uninsured sub costs
- Penalties for incomplete payroll documentation
Accurate bookkeeping and proper subcontractor certificates are the key to avoiding audit shock.
7. Do 1099 subcontractors need to be covered under my Workers’ Comp policy?
If they do not carry their own valid WC coverage → the state considers them your employees.
This means:
- You pay premium on their payroll
- If they get hurt, your policy pays the claim
- Using 1099 to avoid WC does not protect you—NY will pierce it instantly
Always collect and verify COIs.
8. Why is Workers’ Compensation so expensive for contractors in New York?
Because NY combines:
- High claim frequency
- High medical costs
- Lengthy litigation
- Strict regulations
- Heavy enforcement
- Concentration of high-hazard trades
A simple back strain can cost $100k+. Carriers price accordingly.
9. Can I reduce my Workers’ Comp premium legally?
Yes—often significantly.
Contractors can lower costs through:
âś” Accurate classification of employees
âś” Limiting uninsured subs
âś” Safety programs and return-to-work plans
âś” Proper payroll documentation
âś” Scheduled credit programs
âś” Switching to competitive carriers
âś” Reviewing Experience Modification Factors (EMR)
âś” Using pay-as-you-go options
Many contractors overpay simply because they haven’t had a specialist review their account.
10. What happens if I operate without Workers’ Comp in New York?
New York has some of the toughest penalties in the country:
- Fines ranging from $2,000 to $50,000+
- Lawsuits from injured employees
- Criminal charges in extreme cases
- Personal liability for owners
- Inability to bid public jobs
- Stop-work orders
One claim without coverage can bankrupt a company.
Need Workers’ Compensation Insurance Help? Contact BGES Group
BGES Group specializes in Workers’ Compensation for contractors throughout New York. We know the rules, we know the traps, and we know how to protect your company while keeping costs down.
BGES Group – Gary Wallach
Phone: 914-806-5853
Email: bgesgroup@gmail.com
Website: www.bgesgroup.com
If you need help securing Workers’ Comp, understanding your audit, lowering costs, or clearing penalties, we’re here to help.