Do independent contractors need workers’ compensation?

It’s your responsibility to take care of yourself and anyone who works for you. If you don’t have any employees, you’re not legally required to get a policy in most states, but if you end up getting employees and don’t have coverage, you are still responsible for any injuries.

As an independent contractor, you don’t have the same benefits as a salaried employee. There isn’t a bundle of insurance coverage included when you do contract work. Because you’re independent, it’s your obligation to buy your own insurance policies.

And you might need to buy a workers’ compensation policy, even if you’re not legally required to have it.

What is workers’ compensation?

Workers’ compensation is an insurance policy designed to protect you and your employees from the costs of illnesses and injuries that occur as a result of duties performed on the job.

These benefits may include:

  • Medical costs due to sickness or injury
  • Services needed to help recover and return to work
  • Reimbursement for lost wages
  • Protection from employee lawsuits (for medical expenses and lost wages)

Even if you don’t have employees, it’s a good idea to get workers’ compensation coverage for yourself.
In most cases, your health insurance will not cover job-related claims. If you get hurt or sick while working, you will be responsible for the costs unless you have a workers’ compensation policy.

Read more about workers’ compensation when you have no employees.

Certain jobs may require a proof of workers’ comp insurance.

Many clients and companies will expect you to have your own coverage, especially in physically dangerous industries. Employers don’t want the financial responsibility of a contractor working for them who is not a full-time employee. They want you to be responsible for yourself, especially if you get hurt or sick.

The way a hiring party thinks about it is this: If you don’t have your own insurance and something happens to you, they could be held liable. They will be charged higher premiums for you, and they don’t want that responsibility. That’s why they will often request you provide a Certificate of Insurance, or COI, before they hire you.

Employers want you to have your own workers’ comp policy.

Wondering why? It’s because they don’t want to be held liable in the case of a misfortune.There have been many cases where companies have hired independent contractors who have later claimed to be an employee (only after getting hurt) just to collect the workers’ comp benefits. Naturally, companies are trying to protect themselves from that situation.

If you’re an independent contractor, you’re a free agent. And with that comes handling your own insurance.

Are you an independent contractor or an employee?

When it comes to workers’ compensation, it matters. Are you sure you’re considered an independent contractor by the government? The classification of employees is usually determined by how “independent” you actually are.

  • Workers’ compensation is your employer’s obligation if the government considers you to be “employee.”
  • Workers’ compensation is your obligation if the government considers you an independent contractor.

See what the IRS says about it here.

What if I don’t have employees, but I hire other contractors or subcontractors to help out sometimes?

Contractors can be held liable for any illness or injury that happens to a subcontractor while working for them.

Keep in mind that not buying a workers’ compensation policy doesn’t mean you won’t be liable if someone gets hurt while working for you. You just won’t have any help if a claim happens, which could cost you a pretty penny.

If you hire a subcontractor to help out on a project, you become the employer.

When you’re the employer, it’s your responsibility to provide workers’ compensation coverage or require your subcontractors to have their own coverage. Check out our guide on subcontractor workers’ comp requirements.

How much does workers’ compensation cost for independent contractors?

The cost of workers’ compensation depends on where you live, what you do, and how many people you are covering on the policy. The price can vary, so getting a quote is the best way to figure out how much a policy will actually cost you.

How do I get workers’ compensation?

That’s where we come in! Get a quote or give us a call. There’s no obligation, and it’ll only take a few minutes.