What can Workers’ Compensation insurance cover?
These are the most common risks construction workers and construction business owners face on the job:
Accidental injuries like slips and falls
A worker slips on a wet surface while carrying materials and breaks their wrist, requiring surgery and six weeks off the job.** Workers’ compensation insurance for construction businesses could help cover their medical bills and lost wages during recovery.
Falls are the leading cause of death on construction sites and they don’t have to be from great heights to be serious. According to the U.S. Bureau of Labor Statistics, falls, slips, and trips accounted for 370 construction and extraction worker fatalities in 2024.
Lost wages after an injury or accident
A worker tears a muscle lifting heavy roofing materials and can’t work for a month. Workers’ comp insurance could help replace a portion of their wages while they recover, protecting them and keeping your business relationship intact.
Work-related permanent injury or death
In the event of a serious or life-threatening accident, your workers’ comp policy could help cover the associated costs. Depending on the severity of the injury, this may include medical care, long-term disability benefits, burial expenses or survivor benefits for an employee’s family.
An employer liability lawsuit
An injured employee could file a lawsuit claiming that unsafe conditions like defective equipment contributed to their injury. Workers’ comp insurance could help cover the legal costs to defend your business.
If you run your own construction business, you can add business owner’s coverage to ensure that you’re covered if you get injured at work.
How can Workers’ Compensation insurance help protect construction businesses?
Because construction workers face serious physical risk every day, workers’ compensation insurance is one of the most important protections you can carry, whether you’re running a crew or working on your own.
Workers’ compensation coverage could help cover the costs of:
- Medical expenses
- Lost wages
- Job retraining
- Permanent disability benefits
- Death benefits
- Employers liability in the event of a lawsuit
Workers’ Comp may be required by state law
In most states, workers’ compensation insurance is required by law as soon as you have employees. Construction is one of the industries where states tend to enforce this most strictly. Some states even require coverage from the very first employee, with no exceptions.
Even if you work as a sole proprietor (meaning you work alone as a business of one), you may still need to carry workers’ comp. Construction workers — and construction trade workers like carpenters, electricians, plumbers, HVAC technicians, general contractors and roofers — are often required to show a certificate of insurance (COI) to get or renew a professional license or submit a bid. Many commercial clients and general contractors won’t award work to a construction business that doesn’t carry coverage, regardless of whether the law technically requires it.
Workers’ Comp can help cover the cost of construction work-related injuries
Construction is one of the most dangerous industries in the United States, according to the U.S. Bureau of Labor Statistics. Construction and extraction workers experienced 1,032 fatalities in 2024. Falls, slips, and trips alone accounted for 370 of those deaths, more than any other single cause.
The nonfatal picture is just as disturbing: The construction industry reported 173,200 nonfatal workplace injuries in 2023, according to the BLS — injuries that can mean weeks or months away from the job site, with medical bills and lost income adding up quickly.
A workers’ comp insurance policy could help cover costs associated with an injured worker so a single incident doesn’t threaten your business or your livelihood.
Your income and your employee’s income could be protected under Workers’ Comp
If an employee on your construction crew who is covered under your workers’ comp policy needs time away from work to recover from a covered injury, a percentage of their income can continue while they heal. For construction workers whose income depends entirely on showing up to the job site, that protection can be the difference between a temporary setback and losing everything.
What are the most common business risks for construction companies?
Beyond the many physical hazards that construction workers face on the job, construction business owners also face a handful of business-specific risks:
Worker classification. If you regularly use workers you pay as independent contractors, make sure they actually meet your state’s definition of a contractor. Your state may consider them employees, even if you don’t think they are, which means you could owe workers’ comp coverage for them retroactively — plus penalties for the misclassification.
Subcontractor coverage gaps. If a subcontractor working on your site doesn’t carry their own workers’ comp and gets hurt, the liability can fall on you. That’s why it’s important to request a current certificate of insurance from every subcontractor before work begins. Make sure to verify the policy is still active, because an expired policy is the same as no coverage at all.
Licensing compliance. Many state licensing boards require proof of workers’ comp as a condition of getting or renewing a contractor’s license. Operating without required coverage can result in a suspended license.
Premium accuracy at audit time. Your premium is calculated based on estimated payroll and job classifications at the start of your workers’ comp policy. That means that if your crew grows during the year or you take on higher-risk work, your final premium could differ from your initial estimate. Keeping your payroll records current can help you avoid an additional balance due at audit.
How much does Workers’ Comp cost for a construction company?
Construction workers’ comp rates vary more than in most industries because risk levels differ so much by trade. The cost of your policy — also called the premium — depends on a number of factors, including:
- The type of work you or your employees perform and the related class codes.
- How many employees you have.
- Your total payroll.
- How long you’ve been in business.
- The state where you work.
- Your claims history.
Rates vary significantly across construction trades depending on risk level and other factors. For example, an electrician typically has a higher insurance cost than an interior painting business because the risk of serious injury may be higher. And a business with a clean claims history will generally pay less than one with prior claims.
ERGO NEXT offers tailored, affordable workers’ comp insurance built for construction businesses. Try the ERGO NEXT workers’ comp calculator for estimated prices, or get a free quote to see exactly what you’ll pay.
What are Workers’ Compensation construction class codes?
Workers’ compensation class codes are three- or four-digit codes used by the insurance industry to estimate how much risk is involved and the premiums associated with different types of work.
Jobs that are higher risk, such as electrical work or concrete construction, usually come with higher premiums, whereas a desk job in the industry is less likely to lead to injury so it usually has a lower monthly rate.
Workers’ comp classification codes are set mostly by the National Council on Compensation Insurance (NCCI), but some states use their own codes.
It can be useful to look up the workers’ comp construction class codes for the type of work you or your crew does. Understanding your codes can give you a clearer picture of your risk profile and insurance premiums.
Do I need Workers’ Comp insurance if I’m a self-employed construction worker?
You’re not usually legally required to carry workers’ comp for yourself as a sole proprietor. But if you get hurt on the job and you don’t have coverage, you’re on your own for medical bills and lost income. Health insurance won’t cover a work-related injury the same way workers’ comp does, and most health plans don’t include wage replacement at all. For a construction worker whose income stops the moment you can’t work, that gap can be devastating.
Is Workers’ Comp required for construction businesses in every state?
Workers’ compensation for construction businesses is legally required in almost every state the moment you have employees. In fact, construction is one of the industries where states are strictest about enforcement: Many require coverage from the first employee, with no minimum headcount threshold. Some states will require solo construction workers to carry coverage as a condition of licensure, even if they work alone. Requirements vary by state, so check your state’s workers’ compensation board for the specific rules that apply to your business.
What happens if one of my construction workers gets hurt and I don’t have Workers’ Comp?
Workers’ comp for construction businesses exists for good reason: The cost of a single injury could be severe and devastating for a small business owner. Without coverage, your business could be liable for the full cost, including medical treatment and lost wages.
Plus, most states impose penalties for operating without the required coverage. These penalties can include fines, stop-work orders and, in some states, criminal charges. One back injury from lifting or falling and you could face serious medical costs that could devastate some small construction businesses.
Can I require my construction subcontractors to carry their own Workers’ Comp?
You can — and should — require subcontractors you work with to carry their own workers’ compensation insurance policy. And you should verify it before work begins by asking them to show a current certificate of insurance.
This is standard practice in the construction industry, so any subcontractor you hire should be prepared with proof of insurance. If a subcontractor doesn’t have their own coverage and gets hurt on your job site, the liability can land on you even if you didn’t consider them to be an employee or treat them as one.
