As you can see from the chart below, the charges for the use of an uninsured sub are significantly higher for Workers’ Compensation than for General Liability. For this reason, some builders choose not to deduct for General Liability for an uninsured sub. However, if you don’t deduct for General Liability, you’re leaving a lot of dollars on the table and your not giving your sub incentive to get his own coverage. This screen is a comparison of current rates in South Carolina from a carrier that specializes in insuring builders. The rates per $100 also translate into the percentage that you would need to deduct. For example, the Workers’ Compensation rate per $100 of payroll for residential carpentry is $19.51. You can also think of this as having to deduct 19.51%.
And one final clarification is that when you deduct for Workers’ Compensation, you’re actually extending Work Comp benefits to the sub’s employees. On the other hand, when you deduct for General Liability, you’re not extending any coverage to the sub. Instead, you’re merely accounting for a cost of doing business.