Workers’ compensation insurance is basic coverage that protects employees and their families financially if a worker is injured or killed on the job. Also called workers’ comp and workers’ comp, it covers medical bills and lost wages due to work-related accidents. If a worker dies in an accident on the job, a workers’ comp policy can pay the family a death benefit.
States regulate workers’ comp insurance requirements. However, companies with employees are often required to cover. But what if you are an independent contractor without employees? Are you required to get coverage for yourself? There are special considerations regarding workers’ comps for self-employed individuals.
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Workers’ compensation insurance: Sometimes requested by clients
States generally do not require independent contractors and other self-employed persons to have workers’ compensation insurance. However, this does not mean that you are not required to have it.
While your state may say your business can operate without coverage, the companies you work with may have a different opinion. They may require that you have a workers’ comp policy and can prove this by presenting a Certificate of Insurance (COI). If you do not have coverage, they will not accept your job offer.
Protect your business financially if you are injured
When considering workers’ comp insurance, it’s important to look beyond the coverage requirements. Even if neither your state nor your clients require you to maintain coverage, having a policy can benefit you. As with employees, workers’ comps can protect you as a self-employed individual or independent contractor from medical expenses due to work-related injuries or illnesses. In addition, a workers’ comp policy can help replace lost wages during the recovery period.
Labor insurance companies and subcontractors
If you hire subcontractors to help you with projects, you may be wondering how workers’ comp requirements will affect this scenario. Do you need a workers compensation policy to cover your subcontractors?
Again, states dictate workers’ comp requirements, but yours may require you to maintain coverage for them. This requirement may exist even if your subcontractors have their own insurance policy. It depends on whether or not 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 if they receive a 1099. However, your state may have a different definition, so it’s important for workers to check the corporate laws where your business operates.
Your state can impose penalties such as fines and even jail time if you were asked for coverage but didn’t get it. This is true even if you never have to file a workers’ comp claim.
Determine your comp cost of workers
If your state or your clients require you to have a workers’ comp policy—or you He chooses To get it to protect your business – you can get a quote to see what you’ll pay. Many business insurance providers offer instant, self-service quotes online. This is useful because it means you can set the cost whenever it is convenient for you. There is no need to take time out of your busy day to meet with an insurance company representative or several of them if you are looking for the best rate.
The cost of workers comp coverage is based on total annual salaries, but the rate varies. For example, in one state the cost per $100 in wages might be $0.75, while in another it would be $2.50. Other factors such as the type of work you do, claims history, etc. can also affect the cost. Reputable insurance companies will have licensed insurance experts to answer questions about things like coverage requirements and costs.
One of the great things about working with an insurance company using an online business model is that in addition to getting quotes online, you can purchase coverage and activate as soon as the next day in most cases. You can also report claims and manage your policies online. All of this makes obtaining and using workers’ comp and other business insurance much more efficient and a lot less of a drain on your time.
Another vital small business insurance coverage
While this article focuses on workers’ compensation insurance, it is essential to know that most small businesses also need other coverage. Insurance companies offer different policies for different risks. Some of the most common ones are:
- Public liability insurance. This policy covers damages and legal costs associated with a variety of accidents, from damaging the property of others to causing injury to non-employees. A common example is a lawsuit because a client suffered a slip and fall in your office or workplace.
- Commercial car insurance. If your business owns or leases vehicles for business 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 sensitive information and uses it to commit fraud or is likely to do so.
- full insurance. Maximum liability insurance policies will cover you in the event of an accident. Comprehensive policies provide additional protection, covering amounts that exceed the basic policy up to its own limits.
- business owner policy. Often referred to as a BOP, this policy combines liability coverage with business property protection.
Get the information and get workers comp coverage
Like all business owners, independent contractors need to understand workers’ compensation insurance requirements. You should contact the appropriate state agency to learn about your insurance obligations.
Once you understand it, you can easily get coverage if needed or if you just want to make sure you don’t run into major unexpected expenses due to work injuries.