Workers' comp insurance for self-employed and independent contractors
Workers' compensation insurance is usually required by state law for businesses with employees. Self-employed individuals and independent contractors don't typically need workers' compensation insurance for themselves. However, coverage might be required to meet industry regulations and fulfill client contracts.
Even if workers' comp isn't necessary in your case, it's still a good idea for self-employed businesses and independent contractors to have coverage. One benefit of workers' comp is safeguarding your income. If you become injured or ill on the job, it would cover your lost wages and pay your medical fees.
Workers' compensation for self-employed businesses
Requirements for carrying workers' comp for self-employed individuals can depend on several factors, including whether they have employees, as well as their:
- Number of employees
- State
- Industry
Self-employed businesses with employees
If you're self-employed and have employees or hire independent contractors, many states will require workers' comp coverage. However, some states exempt businesses with only a few employees or that employ family members.
Self-employed businesses without employees
If you're a sole proprietor and have no employees, you can opt out of workers' comp in some states. In others, even if you're the only worker in your company or an independent contractor, you may still need coverage. Higher-risk professions might also need workers' comp insurance.
Will my health insurance cover work-related injury or illness?
Health insurance isn't intended to cover workplace injuries or illnesses. If your health insurance pays for a job-related accident, they might require you to reimburse them. Workers' compensation can help self-employed businesses and independent contractors avoid these additional costs.
Workers' comp for independent contractors and 1099 employees
Self-employed individuals who work for other companies as independent contractors or 1099 employees are typically responsible for their own insurance coverage, including workers' compensation.
Some companies might require independent contractors to provide their own workers' comp insurance. For example, an electrician who subcontracts with a general contractor might need to get workers' comp before starting work. In this case, the electrician would purchase coverage through a private insurer or a state-run fund.
It's a good idea to understand workers' compensation laws where you live. Some states require workers' comp coverage for every worker, regardless of whether they are an independent contractor, 1099 employee, volunteer, intern, or citizen of another country. Browse business insurance by state to learn more.
Benefits of workers' comp insurance for self-employed individuals
For self-employed individuals, workers' comp coverage provides many benefits, including:
Personal and financial protection
If you get injured or become ill on the job, workers' comp provides a valuable safety net. It prevents you from paying out of pocket for medical care, and it also covers lost wages while you recover.
Additionally, if an employee or independent contractor is injured while working for you, workers' compensation typically prevents them from suing. In the rare case a lawsuit happens, your insurance will cover your court costs and legal fees.
Reputational protection
Workers' comp coverage shows that self-employed people and independent contractors are reliable. It demonstrates that the contractor is prepared for unexpected events and takes responsibility for their own well-being and financial protection. Clients can feel more confident in your commitment to safety and professionalism.
How much does workers' comp coverage cost for self-employed businesses?
Workers' compensation for self-employed businesses is usually available at affordable rates. Your cost depends on several factors, including location, total payroll, previous claims, and industry.
In 2023, the median monthly price for workers' compensation insurance through Progressive was $67 per month. The average monthly rate was $119. A self-employed business can expect to pay less because their payroll is typically smaller than a larger company's.
Learn more about workers' comp insurance cost.
Get workers' comp insurance for self-employed and independent contractors
Our agents can help you understand state regulations and secure workers' compensation protection at an affordable rate. With appropriate coverage, you can get the peace of mind you need knowing you're protected in case of workplace injuries and accidents.
