Filed Under:Carrier Innovations, Regulation/Legislation

NCOIL Approves Model Mandating Construction WC Coverage

NU Online News Service, Nov. 30, 3:50 p.m. EST

The National Conference of Insurance Legislators unanimously approved an act mandating workers' compensation coverage in the construction industry and establishing penalties for those who try to game the system.

The model, according to NCOIL, mandates workers' compensation in the construction industry with the exception of sole proprietors on residential projects and homeowners, and holds primary contractors liable for the uninsured employees of any subcontractor hired. The legislation establishes auditing procedures, provides penalties for insurance fraud and enhances state enforcement authority.

Aside from mandating coverage, the model calls for penalties to "[a]ny person that knowingly submits an initial application, renewal application, or certificate of insurance as proof of coverage that is false, forged, misleading or incomplete information for the purpose of avoiding or reducing the amount of premiums for workers' compensation coverage...."

The penalty itself is left open, but the model calls for an additional penalty equal to two times the amount an employer would have paid in premium, or $750--whichever is greater--on top of the fine implemented by a given state.

NCOIL said it originally proposed a broad-based workers' comp bill dealing with all employments, but narrowed the model to hone in on construction, which NCOIL said is an area of widespread abuse.

The model was approved Nov. 22 at NCOIL's annual meeting in New Orleans. It was sponsored by NCOIL Workers' Compensation Insurance Committee Chair Rep. Susan Westrom, D-Ky.

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