# When a WC certificate is worthless



## Rio (Oct 13, 2009)

BamBamm5144 said:


> So I am leaning towards subbing everything out, do I still need to pay roofing work comp insurance?


As long as you made sure that your subs had the appropriate insurance and it was current then why would you need it?


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## J L (Nov 16, 2009)

summithomeinc said:


> So? The sub still has all of those costs. Plus has to make profit for the sub. So how do they do it for less? Seems like employees would cut out the "middle man".


With subs, you're able to bid with fixed rates and know exactly what you're going to make at the end of the project. Also, you don't have to bother deducting payroll taxes and making the monthly state and federal payroll taxes. Also, assuming your sub is properly insured, you have more fixed costs when it comes to insurance, which makes life easier.

Subs who are paid by the job usually work quicker towards getting the job done, as opposed to employees who are paid by the hour. Also, subs typically sub 1 trade, and they get good at it. Their guys get a system down and they can knock out work quick.


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## BamBamm5144 (Jul 12, 2008)

summithomeinc said:


> If I had employees that were capable of doing the work 600.00 seems like a non issue. But it would depend on the size of the job I suppose.


You would pay an extra $600 to have employees do something? Would you do that 5 days a week?

And I take no offense to your comments. According to my attorney, a probably drawn up and signed subcontractor agreement should take care of a lot of issues.


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## roofermike (Mar 18, 2012)

*Leasing*

Haven't seen anything about leasing in this thread. It's all the rage right now for roofing contractors in Miami and Florida in general. You run your guys thru an employee leasing co. and they take care of everything. Payroll, taxes, comp., filings, everything. Technically you don't_ have _ employees. You just get the payroll checks and an itemized invoice which includes their FEE.
Every Mon you send in last week's hours, which guys your working that week and list of Building Depts to recieve Comp Certs. 
Works for me. Now if I could just find some roofers . . .

LIKE Roofer Mike @
https://www.facebook.com/pages/Roofer-Mike-Inc


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## Tom Struble (Mar 2, 2007)

i now like roofer Mike:thumbsup:


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## Astrix (Feb 23, 2009)

roofermike said:


> Haven't seen anything about leasing in this thread. It's all the rage right now for roofing contractors in Miami and Florida in general. You run your guys thru an employee leasing co. and they take care of everything. Payroll, taxes, comp., filings, everything. Technically you don't_ have _ employees. You just get the payroll checks and an itemized invoice which includes their FEE.
> Every Mon you send in last week's hours, which guys your working that week and list of Building Depts to recieve Comp Certs.
> Works for me. Now if I could just find some roofers . . .


This could be a good solution for some contractors. Thanks for bringing it up. These are, in essence, temporary employment agencies. If a contractor gets temp workers through them, you have to be very careful to see what they are actually including in their service. They don't usually include "everything".

I have had clients who have gone this route; sometimes because they have a temporary overload of work, or sometimes because they are awarded a job in another province and rather than fly their Ontario employees out to Alberta, they instead used an Alberta agency to supply them with local temp workers for that one-time project. 

Even though the agency took care of the weekly payroll, W/C payments, etc., they did not cover the general liability of these workers. If the temp worker created a claim on site, then it still fell under my client's General Liability insurance.

Please don't misunderstand into thinking I am tearing apart your idea. I think it is a really good one and it can work well for certain contractors. However, it is important to recognize that this isn't the same as hiring a sub-contractor who has his own General Liability coverage for any mistakes his employees make. Some temp agencies don't make it clear that they are not insuring the workers' work. You have to get a clear answer from them as to who is covering the General Liability (workers' work). I just wanted to point out the difference so that contractors can make an informed decision when choosing between subs and temp employment agencies.


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## roofermike (Mar 18, 2012)

Your right, I do carry my own separate liability coverage.
However, these leasing companies - not agencies - do not supply workers. The contractor picks the employee & has them fill out an application which makes them employees of the leasing co.



Thanks Tom for liking Roofer Mike. I'll like ya' back.
(see how it works, guys? I know, I know. I'm just a SEO ho!)


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## summithomeinc (Jan 3, 2011)

BamBamm5144 said:


> You would pay an extra $600 to have employees do something? Would you do that 5 days a week?
> 
> And I take no offense to your comments. According to my attorney, a probably drawn up and signed subcontractor agreement should take care of a lot of issues.


Sorry. I still don't get it. How can a sub save you 600.00/day?


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## BamBamm5144 (Jul 12, 2008)

summithomeinc said:


> Sorry. I still don't get it. How can a sub save you 600.00/day?


I wasn't saying $600 a day. You said that you don't think $600 is a big deal to have employees do the work. I asked you of you would think that if it were $600 - 5 days a week.

I will tell you how they can save $600 on the specific job I am talking about. It is because they are so efficient at what they do, they'll be done 6 hours faster, saving me all that labor, insurances and taxes.


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## summithomeinc (Jan 3, 2011)

BamBamm5144 said:


> I wasn't saying $600 a day. You said that you don't think $600 is a big deal to have employees do the work. I asked you of you would think that if it were $600 - 5 days a week.
> 
> I will tell you how they can save $600 on the specific job I am talking about. It is because they are so efficient at what they do, they'll be done 6 hours faster, saving me all that labor, insurances and taxes.


I do understand the labor savings, If they are that much faster. The sub should be paying insurance and taxes though. So that cost will still be passed on to you. The sub also has to make a profit. I would think that the profit would come close to the labor savings?? Like I said, it does depend on the size of the job. Bottom line (from my point of view) is that a sub should have the same costs,(insurance, comp, taxes, etc) that a GC has. Add profit on top of it and it would seem employees are less exspensive.

So either you don't know your numbers, Which I doubt, or the sub isn't making a profit. If the sub isn't making a profit, it leads to cutting corners, getting done as fast as possible, and an all around chitty job.

So I still think 600.00 is a small amount to pay. Depending on the size of the job.


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## summithomeinc (Jan 3, 2011)

Maybe a better question would be " what costs do you not have to pay by hireing a sub instead of an employee"


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## Calidecks (Nov 19, 2011)

Here in California if an employee gets hurt and the employer doesn't have insurance the employee will still be covered. There is a fund that everyone pays into for this scenario. However that employer is in some major hot water. Also it is a felony to under report your payroll here in Cali. They don't play games with this.


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## J L (Nov 16, 2009)

summithomeinc said:


> Maybe a better question would be " what costs do you not have to pay by hireing a sub instead of an employee"


W/C insurance goes way down
G/L goes way down
No payroll taxes
You limit your liability - if there's a problem, the sub has to fix it on their dime
More limited liability - if it takes the sub an extra day or two to complete, it doesn't cost you anything. While w/ employees you have to pay them hourly


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## BamBamm5144 (Jul 12, 2008)

summithomeinc said:


> I do understand the labor savings, If they are that much faster. The sub should be paying insurance and taxes though. So that cost will still be passed on to you. The sub also has to make a profit. I would think that the profit would come close to the labor savings?? Like I said, it does depend on the size of the job. Bottom line (from my point of view) is that a sub should have the same costs,(insurance, comp, taxes, etc) that a GC has. Add profit on top of it and it would seem employees are less exspensive.
> 
> So either you don't know your numbers, Which I doubt, or the sub isn't making a profit. If the sub isn't making a profit, it leads to cutting corners, getting done as fast as possible, and an all around chitty job.
> 
> So I still think 600.00 is a small amount to pay. Depending on the size of the job.


Why would a sub have the same costs that a GC has? Subcontractors - or at least the ones I am talking about do ZERO advertising. They don't have hours of meetings with people for potentially zero money. Majority of them never pay to get vehicles lettered or any type of company clothing and so on. All they get is an address of a job to complete, show up, do it properly, get paid and leave to the next one. They aren't wasting fuel driving from job to job in hopes that they get the job.

Now I have had a few jobs where employees were cheaper but I have had more were subs would be cheaper. I don't know how the subs pay there guys but as long as the job is done right and it passes my inspection, is it really any of my business how much they pay their guys? 

I just recently had my work comp policy expire so I needed a new one. I told them my plan and that my in house roofing would be dropping dramatically. Now instead of a 5K down payment and payments spread out over the next 10 months, my whole policy is that amount.

Maybe they don't want to make as much money as I would like to make a day and that is why they can be cheaper. Perhaps it is because they specialize in it. The guys I use have been doing my soffit, fascia, gutter work for awhile but they also have three siding crews and two roofing crews. Maybe they make it up in volume. I don't know, their operating costs aren't my business.

If $600 a job isn't a substantial amount to you then please, send me $600 from every job you do this year. I will gladly give you my mailing address.


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## onmywayup (Aug 18, 2012)

summithomeinc said:


> Doesn't it say right on the certificate what they are insured for? I'll have to go find a copy of mine...


Our certificate doesn't, at least here in Michigan. It lists a policy number and claim limits, etc., but says nothing about the codes or types of work we're covered for. 


By the way, although I do understand the logic, it is frustrating as hell to pay all the premiums and not have coverage for myself personally!!


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## fast fred (Sep 26, 2008)

I would guess that 70% of the people doing roofing work where I live have no wc or liablity insurance to cover roofing work.

A few years ago I looked into insurance for roofing and the cost was unreal.


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## onmywayup (Aug 18, 2012)

fast fred said:


> I would guess that 70% of the people doing roofing work where I live have no wc or liablity insurance to cover roofing work.
> 
> A few years ago I looked into insurance for roofing and the cost was unreal.


Whew...seriously? 

In Michigan, if an uninsured contractor hurts themselves on a homeowner's property, the homeowner themselves can be held liable. 

Do homeowner's ever ask about insurance out there? How about commercial jobs? 

We rarely get a homeowner who _does_ ask, but we _always _have to provide it on commercial jobs.


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## Gary H (Dec 10, 2008)

roofermike said:


> Your right, I do carry my own separate liability coverage.
> However, these leasing companies - not agencies - do not supply workers. The contractor picks the employee & has them fill out an application which makes them employees of the leasing co.
> 
> roofermikeinc.com
> ...


Thats how my dad now runs his company.


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## Gary H (Dec 10, 2008)

onmywayup said:


> Do homeowner's ever ask about insurance out there? How about commercial jobs?
> 
> We rarely get a homeowner who _does_ ask, but we _always _have to provide it on commercial jobs.


I never had a homeowner ask for insurance or a copy of the Builders here either. But for the first time since 1989, I had to provide a copy of my Lic. becuse the bank wanted to know i had one, this past week.


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## onmywayup (Aug 18, 2012)

Gary H said:


> I never had a homeowner ask for insurance or a copy of the Builders here either. But for the first time since 1989, I had to provide a copy of my Lic. becuse the bank wanted to know i had one, this past week.


Doesn't it ever kind of piss you off to pay through the nose for insurance, but never really have to show it to anyone?!! If I'm not making claims (and we never have so far, knock on wood), I'm basically wasting a load of money every month unless we do a commercial job. We're 90% residential.....

I do thank people when they actually ask for it though, because having the insurance is one way to distinguish myself from the cut-rate guy who doesn't have the overhead and does jobs for half my cost.


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## Astrix (Feb 23, 2009)

onmywayup said:


> Doesn't it ever kind of piss you off to pay through the nose for insurance, but never really have to show it to anyone?!! If I'm not making claims (and we never have so far, knock on wood), I'm basically wasting a load of money every month unless we do a commercial job. We're 90% residential.....
> 
> I do thank people when they actually ask for it though, because having the insurance is one way to distinguish myself from the cut-rate guy who doesn't have the overhead and does jobs for half my cost.


I respectfully suggest that you are viewing insurance incorrectly. The main reason for buying insurance is not for the homeowner; so you shouldn't care if they ask to see for proof or not. Even though government may mandate it, the main reason you buy insurance is not to be in compliance with the law. Instead, the main reason and real purpose of insurance is to give yourself and your business a financial safety net.

Think of it as an air bag or seatbelt in your car. People in other cars don't care if you have them or not. It is the law to wear your seatbelt and it is annoying to have to keep remembering to buckle up each time you get in your car. Many people are lucky and never end up in a serious accident; but if you do, you will be very relieved that your seatbelt was on and that the air bag deployed. 

All the other issues are insignificant when compared to that rare serious accident and an airbag/seatbelt meaning the difference between walking away with a few bruises or ending up in a grave. Insurance is the same. Odds are you won't need it; but if you do, it can save the life of your business.


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## summithomeinc (Jan 3, 2011)

RemodelGA said:


> W/C insurance goes way down
> G/L goes way down
> No payroll taxes
> You limit your liability - if there's a problem, the sub has to fix it on their dime
> More limited liability - if it takes the sub an extra day or two to complete, it doesn't cost you anything. While w/ employees you have to pay them hourly


Yes your insurance goes down but in reality you are now paying for 2 policies. Yours and the subs. The sub has payroll taxes. So that is still there as well. If it is a legal sub you are still paying those costs plus yours. It's just in a lump sum instead of in payments each month.




BamBamm5144 said:


> Why would a sub have the same costs that a GC has? Subcontractors - or at least the ones I am talking about do ZERO advertising. They don't have hours of meetings with people for potentially zero money. Majority of them never pay to get vehicles lettered or any type of company clothing and so on. All they get is an address of a job to complete, show up, do it properly, get paid and leave to the next one. They aren't wasting fuel driving from job to job in hopes that they get the job.
> 
> Now I have had a few jobs where employees were cheaper but I have had more were subs would be cheaper. I don't know how the subs pay there guys but as long as the job is done right and it passes my inspection, is it really any of my business how much they pay their guys?
> 
> ...


A sub not having advertising doesn't save you anything as a GC. You are still going to advertise. You are still going to have the meetings and fuel to drive to bids. The sub not having those costs doesn't save you anything either.

Your comp policy went down. Like I said above, now you are paying for 2 policies. The sub has it somewhere in his price. That is where I don't get it being less exspensive. A sub DOES have the same costs to do the job.They should have comp. Liability, payroll, etc. relating to their employees just like a GC does. All you are doing is using someone elses employees and paying a premium (profit)for them. Advertising, fuel, etc. will still be spent regardless of if you have employees or not. 
I said 600.00 isn't alot depnding on the size of the job. 600.00 is an enormous amount on a 200.00 job. It's not so much on a 20,000.00 job.


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## BamBamm5144 (Jul 12, 2008)

summithomeinc said:


> A sub not having advertising doesn't save you anything as a GC. You are still going to advertise. You are still going to have the meetings and fuel to drive to bids. The sub not having those costs doesn't save you anything either.
> 
> Your comp policy went down. Like I said above, now you are paying for 2 policies. The sub has it somewhere in his price. That is where I don't get it being less exspensive. A sub DOES have the same costs to do the job.They should have comp. Liability, payroll, etc. relating to their employees just like a GC does. All you are doing is using someone elses employees and paying a premium (profit)for them. Advertising, fuel, etc. will still be spent regardless of if you have employees or not.
> I said 600.00 isn't alot depnding on the size of the job. 600.00 is an enormous amount on a 200.00 job. It's not so much on a 20,000.00 job.


Yes, I am still going to advertise however this is why their prices are lower. They don't spend money on these items.

Yes my comp policy when down and no, I am not paying for two policies. They are paying for their own policy. Sure they have there prices included in their price but now I don't have to pay the monthly bill when we aren't working. Last winter we didn't work for nearly 3 months yet I still paid nearly 4k in comp.

It can save money. Let me put in terms of a roof job I just bid.

35 square roof at 85 a square labor = 2975
My material cost for this roof is 5k which makes a total cost for that job to be 7975.

My guys who cost me over $100 an hour would probably take 32 hours. Figure a nice simple $3200. Now I also have to for equipment, fuel for the compressor and the rest. Then I have to take time to pay all their taxes, and everything else.

The major saving in subs for me is when it comes to metal work.

And the job total of the one I am saving $600 from having them do the soffit work is a 30k total job but to me, $600 is a lot of money and I guess to you it isn't. I like having that extra $600 to pay my vehicle payments.


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## EthanB (Sep 28, 2011)

onmywayup said:


> Doesn't it ever kind of piss you off to pay through the nose for insurance, but never really have to show it to anyone?!! If I'm not making claims (and we never have so far, knock on wood), I'm basically wasting a load of money every month unless we do a commercial job. We're 90% residential.....
> 
> I do thank people when they actually ask for it though, because having the insurance is one way to distinguish myself from the cut-rate guy who doesn't have the overhead and does jobs for half my cost.


The homeowner shouldn't have to ask you for it. You should be showing it to them the first time you meet. If you briefly(like one sentence brief) explain what it is and why you have it then you should eliminate the possibility of any potential customer choosing an uninsured contractor over you. It's a huge competitive advantage over a pretty sizable amount of our competition, the uninsured guys.


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## Astrix (Feb 23, 2009)

EthanB said:


> The homeowner shouldn't have to ask you for it. You should be showing it to them the first time you meet. If you briefly(like one sentence brief) explain what it is and why you have it then you should eliminate the possibility of any potential customer choosing an uninsured contractor over you. It's a huge competitive advantage over a pretty sizable amount of our competition, the uninsured guys.


Good point. 

Part of our annual renewal service to our contractors is to provide them with a Confirmation of Insurance. This is similar to a Certificate of Insurance but it doesn't name a specific certificate holder or project description. Instead it is issued "To Whom It May Concern" and just gives a general description of your business operations and what your liability insurance details are. We either give a set of printed documents or we email a pdf template so that the contractor can print off a fresh copy any time he needs one. 

Some contractors include it in their presentation folders, and some even post it on their websites. It looks a bit more professional as it has the insurance brokerage logo on it, as opposed to something you created yourself. Your own broker should have no problem giving you this type of document for your use. Ours has a disclaimer at the bottom that reads:


> This Confirmation of Insurance is issued as matter of information only and confers no rights on the holder and imposes no liability on the insurer.


Of note, a Confirmation is for your general insurance only (liability, builders risk a/o installation floater, E&O, auto, etc.). It is not used for workers comp. You have to get a separate clearance certificate direct from the W/C board (Canada), or state fund / private insurer (USA).


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## onmywayup (Aug 18, 2012)

EthanB said:


> The homeowner shouldn't have to ask you for it. You should be showing it to them the first time you meet. If you briefly(like one sentence brief) explain what it is and why you have it then you should eliminate the possibility of any potential customer choosing an uninsured contractor over you. It's a huge competitive advantage over a pretty sizable amount of our competition, the uninsured guys.


Point well taken.....I meant more to use the experiences I've had to express my frustration that we pay pretty high rates of insurance, only to have it actually "used" so rarely. 

But your point is well taken. It ought to be a regular part of our pitch. Although maybe I've just too cynical, but I still feel like there is a sizable group of homeowner's (maybe the majority?) that end up taking whatever seems like the cheapest quote that can get the job done right.


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## summithomeinc (Jan 3, 2011)

BamBamm5144 said:


> Yes, I am still going to advertise however this is why their prices are lower. They don't spend money on these items.
> 
> Yes my comp policy when down and no, I am not paying for two policies. They are paying for their own policy. Sure they have there prices included in their price but now I don't have to pay the monthly bill when we aren't working. Last winter we didn't work for nearly 3 months yet I still paid nearly 4k in comp.
> 
> ...


You're right. 600.00 on a 30,000.00 job isn't that much to me. It would be worth it to me to have employees that I had complete control over do the work. If it was that big a deal I would ask my guys if they wanted to sit at home or take a pay cut. But hey I don't have any 30k jobs lined up. So ya must be doing something right.


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## BamBamm5144 (Jul 12, 2008)

summithomeinc said:


> You're right. 600.00 on a 30,000.00 job isn't that much to me. It would be worth it to me to have employees that I had complete control over do the work. If it was that big a deal I would ask my guys if they wanted to sit at home or take a pay cut. But hey I don't have any 30k jobs lined up. So ya must be doing something right.


You're one of the few people I've ever spoke with that doesn't think $600 is a lot of money. $600 is $600 whether the job is $1000 or $100000.

I give you credit for that.


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## summithomeinc (Jan 3, 2011)

BamBamm5144 said:


> You're one of the few people I've ever spoke with that doesn't think $600 is a lot of money. $600 is $600 whether the job is $1000 or $100000.
> 
> I give you credit for that.


The only time 600.00 is alot of money is if you don't have it. As far as business goes 600.00 is peanuts. To put it in a different perspective, I used to earn 120.00/day when I worked hourly. It was nothing to spend 120.00 on a nice dinner and a movie. It costs 120.00 to fill my van with gas. It cost a 100.00 today for my daughters chorus fees.

Now I make considerably more than that per day. A days pay is still a days pay. So 600.00 isn't that much money when you look at the bigger picture.


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## fast fred (Sep 26, 2008)

was working on this job years ago and the head guy swore he had comp. ins. It covered him and his three workers, he even showed me the paper work one day when I called his bs, it was a ratty old ins. document that he pulled out of his truck 

The kicker was, the guy never had enough money to put gas in his truck and when the batteries died on his truck he could only afford to replace one of the two. How can you afford WC if you can't maintain your truck

I'm pretty sure he bought the policy with a downpayment and never made another payment.


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## fast fred (Sep 26, 2008)

onmywayup said:


> Whew...seriously?
> 
> In Michigan, if an uninsured contractor hurts themselves on a homeowner's property, the homeowner themselves can be held liable.
> 
> ...



Colorado is a joke as far as insurance requirements.

They were going to pass a law 10 or 15 years ago requiring everyone to have WC and liablity. It was mostly aimed at the illegal immigrants, well the builders associations and the big contractors all fought against it saying it would sky rocket building costs. 

I know people who remodel and do all kinds of projects who don't have an ounce of coverage LIB. or WC.

On the other hand alot of people are up an up on the ins. I'm one of them. You need to keep an eye on it because alot of subs will stop paying and it will get cancelled and then I'm up the creek without a paddle


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