While the actual “coverages” provided by all workers’ compensation policies are the same, “Who is Covered” under the polices is not. Let’s go over the 2 types of policies and point out the differences.
Policies purchased Directly from an Insurance Company:
Coverage with a policy purchased directly from an insurance company, (through a licensed agent), provides coverage to all your employees, along with coverage for all Casual and Contract Labor as well as Uninsured Subcontractors (Statutory Employees).
Policies purchased through a PEO:
The “Who is Covered” on the PEO policy only covers “the Employees Reported To, Approved By and Named on the Policy”. So, to be clear, any firm that gets their coverage through a PEO/leasing company leaves the firm with NO COVERAGE for:
Casual labor
Contract Labor
Uninsured Subcontractors
and ANY EMPLOYEES OR OWNERS not yet reported to and approved by the PEO.
Your company, not the PEO provided workers’ compensation policy, would be responsible for these claims if anyone is injured while working for you.
This information is important because it applies to your firm not only if you are insured with a PEO, but also if you choose to accept/allow a subcontractor to work for you that has coverage with a PEO. Your policy can and normally will become responsible for any workers’ injuries for any subcontractors' employees that are not covered under their PEO policy for the reasons stated above.
Due to the seriousness of this subject, we will be dealing with this in a follow-up article giving examples of some of the dangers relating to this subject.