An Alternative to Workers Compensation for Gig Workers

An Alternative to Workers Compensation for Gig Workers

June 5, 2019 Business Insurance and Risk Management, The Beacon Blog 0 Comments

A recent post by Vincent Capaldi, president of Bay Oaks Wholesale Brokerage in the LinkedIn group Workers Compensation Roundtable sparked a discussion of occupational accident insurance. The NLRB general counsel has opined that Uber drivers are contractors not employees. Although some states have taken the opposite position, gig workers do run the risk of no coverage for work injuries (for drivers, this would include automobile accidents if their Personal Auto medical benefits exclude business use).

For workers who do not qualify as employees, occupational accident insurance has been used for a long time. It is common in the transportation industry but can cover other types of contract labor. It covers medical benefits, qualified expenses and disability for on the job injuries. Unlike workers compensation which covers benefits required by state law, occupational accident insurance has policy limits and excludes certain types of worker.

Although coverage can be offered on a voluntary basis, accident insurance works best when it is a condition of employment. This protects the company since workers who cannot prove they are insured will be charged as employees on the company’s workers compensation policy. Injured workers with insurance are less likely to sue the company since they have coverage. If payment is an issue, “pay as you go” policies are a possible solution.

Companies which hire independent contractors or gig workers on a regular basis should insist on evidence of either workers compensation or accident insurance from them.

About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.