Workers Comp for Self-Employed

Workers’ comp is a type of business insurance that can help self-employed individuals and small business owners protect themselves in case they get hurt or sick in the course of running their business and are unable to work. In cases where a self-employed person gets hurt or sick at work, workers’ comp provides coverage for medical and rehabilitation costs as well as lost wages. 

If you’re self-employed, workers’ comp can help protect your business in case of an injury or illness. It can also provide a financial cushion if you’re unable to work for a period of time, helping cover the costs associated with lost income and paying for ongoing medical care.

Is Workers’ Comp Insurance Required for the Self-employed?

Workers’ comp is legally required in nearly every state (except Texas) for businesses that have employees. However, workers’ comp is not legally required for businesses that have no employees. Still, if you’re self-employed, while you aren’t technically required to carry workers’ comp, it can still provide invaluable coverage if you’re at risk of a work-related injury or illness.

Some cases where workers’ comp is especially important for self-employed individuals include:

• Contractors. Contractors are often up on ladders, walking on roofs, and crawling in crawlspaces, making them especially vulnerable to getting sick or injured while on the job.
• Handymen. Like contractors, handymen often work with power tools and handle projects that make them more likely to get hurt.
• Painters. If a painter falls off a ladder or gets hurt on scaffolding, their health insurance may cover any emergency medical care, but probably won’t cover rehab costs or lost wages.
• Carpenters. An accident with a nail gun or table saw can lead to considerable lost wages, which can be devastating if you don’t have coverage.
• Electricians. Aside from the obvious risk of electrocution, electricians are often up on ladders and using other equipment when wiring a home. 
• Plumbers. Plumbers can get hurt working with equipment, digging, or working in basements and crawl spaces on pipes.
• Manual labor. Manual labor is hard, and when you’re working hard, accidents happen. If you get hurt and can’t work, that can mean a lot of lost wages.

While these are some types of work that are particularly prone to injury or illness, there are others as well. Regardless of your work, if you’re self-employed and face the risk of getting sick or injured while working, having workers’ comp as a self-employed person can mean the difference between keeping your bills paid while you can’t work and defaulting on your obligations. It can also mean the difference between having the money to help pay for rehab and recovering more slowly (or incompletely) from workplace accidents.

Do You Need Workers’ Compensation for Independent Contractors?

If you’re an independent contractor, you aren’t legally required to carry workers’ compensation coverage. However, not being a full-time employee also probably means you aren’t covered by anyone else’s policy, such as a general contractor you work for or one of your clients.

So, if you work in a field where work-related injuries or illnesses are common, having workers’ comp is important – even for independent contractors.

State workers’ comp requirements 

Every state has its own rules and requirements for workers’ compensation. For example, every state except Texas requires any company with employees to carry workers’ comp in case an employee gets sick or hurt as a result of their work. 

Additionally, some states have their own workers’ comp funds that employers can use as an alternative to private insurance. Some states with their own insurance funds include Arizona, California, Colorado, New York, Pennsylvania, and Texas. In fact, in some states, if you buy coverage, it has to be from the state fund. These are called monopolistic states and include North Dakota, Ohio, Washington, and Wyoming.

However, in other states, you can still work with a private insurer. You can find out more about your state’s requirements by searching for the Bureau of Workers’ Comp in your state, or you can contact a licensed expert who can help you through the process.

Best Self-employed Workers’ Compensation Insurance

If you think you may want workers’ comp coverage to cover your small business or self-employed activities, these are some of the best providers of workers’ comp coverage to consider working with:

The Hartford

The Hartford is our preferred partner for workers’ compensation insurance for self-employed individuals and small business owners. The company specializes in providing workers’ comp insurance for both full-time and part-time employees, with options for a wide range of businesses including contractors, handymen, painters, carpenters, electricians, plumbers, and manual laborers. 

Liberty Mutual

National insurer Liberty Mutual is another big player in the workers’ comp space. In fact, the company underwrites nearly 5% of all workers' comp policies nationwide. And, with built-in resources for improving worker safety and controlling employer premiums, its easy to see why so many small business owners turn to Liberty Mutual for workers' comp coverage.

Travelers

Travelers is another large and established business insurance provider. In fact, it’s one of the largest property and casualty insurers in the country. Coverage from Travelers is available through thousands of independent insurance agents nationwide. So, if you have a local agent or expert you’d like to work with, you may be able to work with them to get coverage from Travelers.

Next Insurance

If none of the options above work, or if you want to buy coverage quickly and totally online, Next Insurance is another option to consider. Next is set up as an online insurance marketplace, partnering with numerous carriers to help you find the right coverage for you. If you want to see your options based on where you’re located, the type of work you do, and other factors, visit Next Insurance to see what’s available.

Workers’ Comp for Self-Employed FAQs

Do I need self-employed workers’ comp if I have health insurance? 

If you’re self-employed and get hurt or sick while working, health insurance will pay for emergency medical care and potentially some ongoing medications or other treatments. However, health insurance does not cover rehab costs or lost wages while you’re unable to work. Workers’ comp provides additional protections not included in a health insurance policy.

Why did I get a year-end workers’ comp insurance bill?

Many workers’ comp policies are renewed at the end of each year and may require a bill in order to renew coverage. Additionally, each year workers’ comp providers audit business owners to make sure all insured employees are correctly classified based on the type of work they provide. If the insurer finds that you or any of your employees have been misclassified, this may result in an additional bill.

Am I covered for workers’ comp by my general contractor?

If you perform work for a general contractor but are not an employee of that contractor, you may not be covered by their workers’ comp policy. Instead, you may need to buy your own coverage or negotiate with them to be covered by their policy.

Will pre-existing conditions prevent me from getting self-employed workers’ comp?

If you have a pre-existing condition, you can usually still get workers’ comp coverage for your small business or self-employed activities. However, any losses resulting from your pre-existing condition likely will not be covered.

Does a single-member LLC need workers’ comp insurance?

A single-member LLC with no employees is not required to purchase workers’ comp insurance. However, depending on the type of work you do and the risks you face, it may be a good idea to buy coverage to protect you if you get hurt or sick while working.

Do I need workers’ comp if I have disability insurance?

Like health insurance, disability insurance can also help to cover certain costs related to a work-related injury or illness. However, workers’ comp does cover some costs (such as rehab costs) that often aren’t covered by disability insurance.