Insurance versus luck

Posted October 26, 2006

Any Island tradesman or service worker whose job combines physical labor with elements of risk may be one step away from an accident like Scott McArthur's.

A Martha's Vineyard Commission report on the Island's economy from 1980 to 2003 shows that the vast majority of Vineyard businesses, about 70 percent, employ between 1 and 4 workers. For these small businesses, the loss of an employer or employee for several weeks or months following an injury is a hardship.

Like Mr. McArthur, many small business owners do not carry a Workmen's Compensation policy on themselves, which protects against income loss after an accident on the job, said Bill Taupier, deputy director of administration for the state Department of Industrial Accidents.

Although business owners are required by state law to buy Workmen's Compensation policies for employees, it is optional for the owner, particularly a sole proprietor, Mr. Taupier said. Workmen's Compensation is calculated using a set of criteria based on payroll and profession, which is classified according to risk factors. Not surprising, premiums for occupations such as roofing, iron work, and tree services cost much more.

Martha's Vineyard Insurance vice president Bill Brown, who has worked in the insurance industry since 1984, said the costs force some small business owners to make some difficult choices. "A lot of guys think, I have health insurance, I'll take my chances, and they don't cover themselves for disability," Mr. Brown said. "It's the cost of doing business. You have to be able to put food on your table, have a roof over your head and turn on your lights; it's a question of priorities."

Chris Chandler, owner of Thornton Chandler Roofing, has been in business 26 years and employs about 10 to 12 workers, plus clerical staff. "We've all seen major increases in the cost of doing business since 9-11," Mr. Chandler said. With insurance costs rising, he said, "The issue is health insurance and then back-up for lost income. You have to figure out how vulnerable you are to an injury, and then go from there in making your analysis about lost income and how to cope with it."

As insurance costs increasingly take a larger percentage of a small business's bottom line, Mr. Chandler said, "If you figure out how many months a year you work strictly to pay insurance before you see a dime, it's enough to make you want to quit."

Tom Robinson, owner of Island Timber, estimates he pays out about 15 percent of his business's revenues towards insurance, including Workmen's Compensation, liability, state unemployment, and vehicles.

With two full-time employees, Mr. Robinson said his situation is very similar to Mr. McArthur's. Like Mr. McArthur, Mr. Robinson has health insurance but no Workmen's Compensation policy for himself. "It's a gamble, but I'm always struggling to make some money at the end of the line," he said.

For commercial fishermen such as Wayne Iacono, health insurance is available through the Massachusetts Fishermen's Partnership. However, Mr. Iacono said he knows many fishermen who do not have any health insurance. "As far as any insurance for loss of income, basically I keep my fingers crossed," he said.

However, even with health insurance, medical bills may compound a loss of income after an injury, as Island Health executive and finance director Cindy Mitchell pointed out. Some health insurance policies have a high deductible and high out-of-pocket expenses. "Just because you have health insurance doesn't mean you might not have medical bills," she said.