Certificate of Insurancefor workers’ compensation coverage
Employers in the construction industry, also known as contractors or construction services providers (CSPs), are required to carry workers' compensation insurance coverage that covers all of their employees. The Certificate of Insurance (COI) provided by the insurance agent after a policy has been purchased verifies coverage, and a copy of the COI must be kept at the employer's place of business and on all job sites. General contractors need to keep copies of the COI(s) of all their subcontractors in addition to their own.
Note that workers' compensation is a separate insurance category; it does not fall under general liability or an umbrella policy.
Tennessee State Requirements
The law requires it, and you could face penalties for non-compliance.
- Tennessee Code Annotated §50-6-405(j) states: "Any employer of a construction services provider, as defined in § 50-6-901, shall, upon request by the bureau, provide proof of valid workers' compensation insurance coverage at the employer's place of business and at job sites where the employer is providing construction services. Failure to provide proof of valid workers' compensation insurance coverage within one (1) business day of the request may result in a penalty of not less than fifty dollars ($50.00) nor more than five hundred dollars ($500) per violation for any initial violation at the discretion of the administrator or administrator's designee, and not less than fifty dollars ($50.00) nor more than five thousand dollars ($5,000) per violation for subsequent violations. The administrator has discretion in determining acceptable proof of coverage, including electronic proof of coverage, taking into account standard insurance industry practices. Insurers shall advise policy holders who are construction services providers regarding the availability of electronic downloads of policy information to facilitate field inspection of proof of workers' compensation coverage."
- An employer that does not have a copy of their COI onsite is considered "non-compliant" and will receive a notice from the Bureau. The employer must provide proof of insurance within one (1) business day or they may face a penalty of between $50 and $500 for the initial violation, and up to $5,000 for any subsequent violations.
- Additional penalties may apply for failing to have workers’ compensation insurance or misclassifying employees as independent contractors.
- In addition to penalties assessed by the Bureau, employers could face charges in audits performed by the insurance carrier.
Best Practices for Contractors/Construction Services Providers (CSPs)
- Contractors who subcontract any of their work should consider requiring a COI from their subcontractors. Tennessee law allows a worker employed by an uninsured subcontractor who is injured on the job to go “up the ladder”, meaning that they can hold the general contractor responsible for compensation.
- To avoid fraudulent documents, contractors should never accept a COI directly from another contractor; always confirm coverage with the insurance agent.
- Hiring non-compliant contractors hurts the industry by enabling them to break the law, have lower rates, and create unfair competition.
- Delays during a workers' comp claim caused by fraud will ultimately impact the injured workers' health, their ability to obtain timely medical treatment, and ultimately, their return-to-work.
How to Comply
- Keep proof of COI(s) on site.
- Proof of COI(s) can be on paper or saved digitally.
- All contractors (general, sub, & independent) must obtain their own COIs and provide them when required.
- BWC compliance inspections are unannounced, so this is the best way to be prepared.
- Obtain and keep a copy of subcontractors' COIs from their insurance agent to ensure they have workers' compensation coverage.
- Periodically check the COI(s) coverage and expiration dates—at least monthly – as well as review for oddities.
- With insurance agency
- Track policies by visiting NCCI
- Consider covering subcontractors under your workers’ comp insurance policy by using the I-15 Form.
- This form allows subcontractors, with the agreement of the general contractor, to be covered by the general contractor's workers' compensation insurance. It allows the general contractor to withhold premiums from the subcontractor's payroll to cover the subcontractor and its employees.
- Out-of-state contractors must also have COIs as Tennessee law requires them to have "3A" coverage.
- Tennessee does not accept WC insurance listed only in line "3C" of the policy. TN must be listed in "3A," which is a home state policy, no matter how long the construction service provider will have employees working in Tennessee. This information is not displayed on the COI, so it is good practice for the employers to verify valid insurance coverage with the appropriate insurance agent or carrier.
- If the out-of-state contractor does not have a Tennessee address, it must buy a separate Tennessee policy.
- WC Insurance Coverage Requirement
A resource document for out-of-state construction service providers.
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