Safety is a non-negotiable in the construction industry; however, home builders and subcontractors regularly encounter jobsite hazards such as machinery accidents, falls, and repetitive stress injuries. Workers’ compensation insurance is necessary for safeguarding your business, your team, and your finances when something goes wrong on the job.
This guide explains the basics of workers’ comp for home builders and subcontractors, especially in Virginia, and outlines how to stay compliant while keeping your team covered.
What Workers’ Compensation Covers
Workers’ compensation insurance helps cover expenses from job-related injuries or illnesses. For construction professionals, this coverage typically includes:
- Medical bills
- Disability payments
- Lost wages during recovery
- Vocational rehabilitation
- Benefits for surviving family members
- Legal protection for the employer
Given the high-risk nature of construction work, home builders can’t afford to go without this type of insurance.
Virginia’s Requirements for Home Builders and Subcontractors
Virginia requires businesses with three or more employees (whether full-time, part-time, or seasonal) to carry workers’ compensation insurance. This law also applies to general contractors who hire subcontractors. If a subcontractor does not carry a workers’ compensation policy, the contractor can be held responsible for injuries suffered by that subcontractor’s employees.
This is known as the “statutory employer” rule under the Virginia Workers’ Compensation Act, detailed in Virginia Code § 65.2-302.
Noncompliance can merit civil penalties of up to $250 per day, with a maximum of $50,000 plus collection costs. Failing to comply may also expose the company to liability for all medical costs and wage replacements related to a workplace injury.
Understanding Worker Classification
Construction businesses often work with a mix of employees, subcontractors, and independent contractors. However, Virginia law presumes that all workers are employees unless the business can prove otherwise. This aligns with IRS guidelines and makes proper classification imperative.
A 2020 law in Virginia reinforced this presumption, placing the burden on employers to show that a worker is truly independent. As an employer, even if you call someone a subcontractor, you may still be liable for providing workers’ comp if you exert enough control over their work.
How to Protect Your Business
Home builders can take several steps to reduce risk and ensure compliance:
- Always request a Certificate of Insurance (COI) to verify that subcontractors have workers’ compensation coverage.
- Include clear insurance requirements in subcontractor agreements to set expectations and limit your liability.
- Maintain organized records of all subcontractor COIs and contracts in case of audits or claims.
- Consider carrying blanket coverage that includes all on-site workers, especially if you regularly work with subcontractors who may not have their own policies.
Clearly defining expectations in contracts is one of the most effective ways to manage your risk.
What Happens If You Don’t Have Coverage
If a worker is injured and you don’t have a valid workers’ compensation policy, your business could suffer serious consequences. In addition to state penalties and legal fees, you may be responsible for all medical bills, lost wages, and settlements out of pocket.
According to the Virginia Workers’ Compensation Commission’s Contractor Information Sheet, employers who hire subcontractors may still be considered the “statutory employer” under Virginia law. In other words, they could be held responsible for workers’ comp claims, even if the injured party is technically employed by someone else.
Additionally, misclassifying employees as independent contractors can expose companies to audits, fines, and lawsuits. This kind of liability can bankrupt a small construction business and severely impact larger firms.
Workers’ Compensation Costs and Savings
The cost of workers’ comp insurance for home builders depends on several factors:
- Payroll size
- Number of employees
- Jobsite risks
- Claims history
On average, construction companies pay around $254 per month for workers’ compensation coverage, though premiums may vary depending on the level of risk associated with specific trades and job duties.
Improving workplace safety and maintaining a low claim history can help control premium costs. Safety training, protective equipment, and clearly documented policies all contribute to better rates over time.
Insurance Is More Than a Requirement: It’s Protection
Workers’ compensation is not just a legal box for home builders and subcontractors to check. It is a fundamental aspect of running a responsible, professional business. It protects your team when injuries happen and shields your business from financial disruption.
With jobsite risks always present, having the right policy in place means you can stay focused on what you do best: building homes.
Partner with Burton & Company to Build a Safer Business
At Burton & Company, we help home builders and contractors across Virginia get the coverage they need. We understand the challenges of hiring subcontractors, managing crews, and maintaining compliance. Our team will work with you to customize a workers’ compensation policy that fits your operation and protects your people.
Let’s talk about your coverage needs today. Visit https://burtonandcompany.com to schedule a conversation with an experienced agent.
