As most builders know, the request and acquisition of a certificate of insurance from a subcontractor is very important to your bottom line. Both from a liability standpoint and from a financial standpoint.
But what do you do when a subcontractor approaches you and says “I work for/by myself and I do not want to be covered by workers compensation.” By law, he/she is correct. Years ago, Oklahoma enacted a law that allows individuals, partnerships, or companies with no employees to exempt themselves from workers compensation coverage. But, how do you address this situation to protect yourself?
What started out as a way for these “employee-less” companies to exempt themselves has become a point of contention to policyholders and insurance companies alike. Abuse of this law has become common and the methods in which some subcontractors circumvent the rule have been numerous.
Oklahoma first allowed individuals to “opt out” by issuing a Certificate of Non-coverage card (CNC). This was a simple process that didn’t require any “proof” of their operations nor did it require any review. A subcontractor simply printed a form from a website, signed it and he/she were supposedly exempt. Well, this system didn’t work out very well. Like they say, a few people can spoil things for the masses. So our legislature changed the law and required individuals wanting to opt out to secure an “Affidavit of