Workers’ compensation insurance is essential coverage that financially protects workers and their families if a worker is injured or killed on the job. Also called workers’ comp and workman’s comp, it covers medical bills and lost wages due to work-related accidents. If a worker dies while on the job, a workers’ comp policy can provide death benefits to the family.
Regulate state workers comp insurance requirements. However, companies with employees almost always require coverage. But what if you are an independent contractor with no employees? Do you need to have coverage for yourself? There are special considerations regarding worker compensation for the self-employed.
Q1 2023 Hedge fund letters, conferences and more
Gates Capital Management reduces risk after rare down year [Exclusive]
Gates Capital Management’s ECF Value Fund has an excellent track record. The funds (full name Excess Cash Flow Value Fund), which invest in an event-driven equity and credit strategy, have generated annualized returns of 12.6% over the past 26 years. The fund added 7.7% overall in the second half of 2022, outpacing the 3.4% return Read More
Workers’ Compensation Insurance: Sometimes required by customers
States generally do not require workers’ compensation insurance for independent contractors and other self-employed individuals. However, that doesn’t mean you never need to have one.
While your state may say your business can operate without coverage, the companies you work with may have different opinions. They may require that you have a workers comp policy and prove this by providing a Certificate of Insurance (COI). If you don’t have coverage, they won’t accept your bid on the job.
Protecting your business financially if you are injured
When considering workers comp insurance, it’s important to go over coverage requirements. Even if neither your state nor your client requires you to maintain coverage, having a policy can benefit you. As it does with workers, workers comp can protect you from medical expenses caused by work-related injuries or illnesses as a self-employed person or independent contractor. Also, a workers’ comp policy can help replace lost wages while you recover.
Workmen’s Com Insurance and Subcontractors
If you hire subcontractors to help you on projects, you may want to consider how workers’ comp requirements affect that scenario. Do you need a workers’ compensation policy to cover subcontractors?
Again, states dictate workers comp requirements, but you may require that you maintain coverage for them. That requirement may exist even if your subcontractors have their own workers’ comp insurance policies. It depends on whether your state classifies subcontractors as “employees.”
As a general rule, someone is considered an employee if they receive a W-2 tax form from you and a contractor receives a 1099. However, your state may have a different definition, so it’s important to review your workers’ comp laws where your business operates.
Your state may impose fines and even jail time if you need coverage but don’t get it. This is true even if you never have to file a workers comp claim.
Determining the cost of your employees
If your state or clients require that you have a workers comp policy—or you to like You can get a quote to learn what you’ll pay – to get it to protect your business. Many business insurance providers offer instant, self-service quotes online. This is helpful because it means you can schedule your spending whenever it’s convenient for you If you’re looking for the best rate, you don’t need to take time out of your busy day to meet with an insurance company representative or several of them.
The cost of workers’ comp coverage is based on gross annual salary, but rates vary. For example, in one state, the cost may be $.75 per $100 of wages, in another state, it is $2.50. Other factors like your type of work, your claim history, etc. can affect your cost. Licensed insurance experts from reputable insurers will be available to answer questions about things like coverage requirements and costs.
One of the great things about working with an insurance company with an online business model is that, in addition to getting quotes online, you can purchase coverage and activate it as soon as the next day in most cases. You can also report claims and manage your policies online All of this makes getting and using employee company and other business insurance a lot more efficient, and a lot less time for you.
Other important small business insurance coverage
Although this article is focused on workers’ compensation insurance, it’s important to know that most small businesses need other coverages as well. Insurers offer different policies for different risks. Some of the most common are:
- General Liability Insurance. This policy covers damages and legal expenses related to a variety of incidents, from damaging the property of others to injuring non-employees. A common example is a lawsuit for a client’s slip-and-fall injury at your office or place of business.
- Commercial auto insurance. If you own a business or lease a vehicle for work purposes, this policy protects you from lawsuits if you are at fault in an accident.
- Cyber insurance. Often purchased as an add-on to a liability policy, this coverage protects you if someone steals or is likely to use sensitive information to commit fraud.
- Umbrella insurance. Liability insurance policies have a maximum value that they will cover in the event of an incident. Umbrella insurance policies provide additional protection, amounts that exceed the underlying policy up to their own limits.
- Business owners policy. Often referred to as a BOP, this policy combines liability coverage with business property protection.
Be aware and get workers comp coverage
Like all business owners, independent contractors need to understand their workers’ compensation insurance needs. You should contact the appropriate state agency to learn about your insurance obligations.
Once you understand them, you can easily get coverage if needed or if you want to make sure you don’t end up with significant unexpected expenses due to a work-related injury.