If you’re a general contractor in Missouri, you’ve heard every version of this argument: “I’m exempt.” “I’m just a one-man shop.” “I’ve never had a claim in 20 years.” “You’re the only GC who asks for this.”
Here’s the problem: most of those arguments are either legally wrong or completely miss the point. And every time you accept one of them and let an uninsured sub on your job, you’re signing up to pay their workers’ comp premium at your next audit — whether anyone gets hurt or not.
This post gives you the answers, backed by Missouri law, for the four arguments you hear most.
Argument #1: “I’m the owner of my LLC — owners are exempt.”
This is the most common argument, and for construction work in Missouri, it’s simply not true.
Under RSMo § 287.030, every corporation and LLC that uses the service of another for pay is an “employer.” And Missouri’s construction industry threshold is different from everyone else’s: while most Missouri businesses need five employees before workers’ comp is required, construction employers need coverage with just ONE employee.
Here’s the part most subs don’t know. According to the Missouri Division of Workers’ Compensation, when a business is organized as a corporation or LLC, everyone who works for it counts as an employee — including the owners, members, and corporate officers. An LLC member swinging a hammer on your job site is an employee of that LLC.
What to tell your sub: “If you’re an LLC or corporation and you personally work in the business, Missouri law counts you as your own employee. That’s one employee — which meets the construction threshold. Your company is required to carry workers’ comp. This isn’t my policy; it’s state law.”
One narrow exception exists: a corporation with two or fewer owner-only employees can opt out — but only by filing a written withdrawal notice with the Missouri Division of Workers’ Compensation and getting it approved. Until that filing is complete, coverage is required. And LLCs have no equivalent opt-out at all.
Argument #2: “I’m a sole proprietor with no employees — I really am exempt.”
This one is actually true — as far as it goes. A true sole proprietor with no employees isn’t required to cover themselves under Missouri law.
But here’s what the sub doesn’t understand: their exemption solves THEIR legal problem, not YOURS.
RSMo § 287.040 — Missouri’s statutory employer doctrine — makes a general contractor liable for workers’ compensation benefits when an uninsured subcontractor’s worker is injured on the job. In plain English: when an exempt sub works on your project without coverage, Missouri law treats you as their insurer. If they get hurt, your policy pays.
What to tell your sub: “Your exemption covers your legal obligation. It doesn’t do anything about mine. Missouri law makes me your statutory employer the moment you step on my job without coverage — so your exemption doesn’t protect me, it exposes me. That’s why I need a certificate of insurance, not an explanation.”
Argument #3: “I’ve never had a claim. You have nothing to worry about.”
This argument assumes the only cost of an uninsured sub is a potential injury claim. That’s not how workers’ comp insurance works.
Every workers’ compensation policy gets audited at the end of the policy year. The auditor reviews your payroll, 1099s, job cost ledgers, and certificates of insurance for every subcontractor you used. Then this happens:
- No COI on file means the sub is treated as uninsured — regardless of any claimed exemption. Auditors cannot accept a verbal “I’m exempt.” They need a certificate of insurance or valid documentation of a filed exemption.
- Every dollar you paid that sub gets reclassified as YOUR payroll, under their trade’s class code.
- You get charged additional premium on that amount.
Construction class code rates are not cheap. A GC who paid $50,000 to uninsured subs during the year can face thousands of dollars in surprise audit charges — with zero claims ever filed. The carrier charges because § 287.040 puts them on the hook for those workers; if they’re carrying the exposure, they’re collecting the premium.
What to tell your sub: “It’s not about claims. My insurance company charges me premium on every dollar I pay you if you can’t show a COI. Your perfect safety record doesn’t change my audit bill.”
Argument #4: “You’re the only contractor who asks for this.”
They’re wrong — and if other GCs really aren’t asking, those GCs are getting hammered at audit.
RSMo § 285.232 requires contractors on Missouri construction projects to obtain proof of a current, valid workers’ compensation certificate from subcontractors before work begins. Requesting a COI isn’t a personal preference or a trust issue. It’s a legally grounded requirement that protects your audit results.
What to tell your sub: “Missouri law requires me to collect this before you start. Any GC who isn’t asking is either eating audit charges or about to. If you want steady work from contractors who run their business right, a current COI is the price of admission.”
What Should You Actually Require From Every Sub?
Keep it simple and consistent:
For LLCs and corporations: a certificate of insurance showing active workers’ compensation coverage. No exceptions — the law requires them to carry it.
For true sole proprietors with no employees: either a COI from a voluntary workers’ comp policy, or a clear understanding that their payments will be charged to your policy at audit. Many GCs simply decline to hire uninsured sole proprietors for exactly this reason — and many sole proprietors buy voluntary coverage to stay competitive.
For everyone: verify the certificate is current, keep it on file, and re-verify at renewal. An expired COI is the same as no COI when the auditor comes calling.
The Bottom Line for Missouri General Contractors
When a sub argues about workers’ comp, remember: you’re not asking for a favor. Missouri law requires most construction subs to carry coverage, requires you to verify it, and bills you for the ones who don’t. The sub’s “exemption” is their answer to their problem — the certificate of insurance is the answer to yours.
If you’re a general contractor tired of audit surprises, or a subcontractor who just realized you need coverage, the team at MBG Insurance helps Missouri contractors get this right every day. We can review your COI collection process, quote workers’ comp for your subs, and help you walk into your next audit with nothing to worry about.
Request your proposal here: https://www.millenniumbrokers.com/quotes/
About the Author
Kirk Reisner is Partner & Chief Financial Officer at MBG Insurance, an independent agency with offices in Springfield and Oak Grove, Missouri, and Bentonville, Arkansas. A licensed Missouri insurance producer since 2000 and a former claims adjuster, Kirk specializes in commercial insurance for small and mid-sized businesses. Learn more about Kirk or get in touch here.