Paige Cerulli Last Updated On: May 14, 2024

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Small Business Workers Compensation Insurance

Workers compensation insurance helps to protect both employers and employees. If an employee is injured or becomes ill as the result of their job, workers comp insurance can help to cover expenses like medical bills and time off. Currently, all states but Texas require employers to purchase this coverage for employees.

But what if your business works with independent contractors instead of employees? Or, what if you’re an independent contractor, yourself? Understanding small business workers compensation insurance requirements and benefits can help you to determine if you need to purchase this coverage for your specific situation.

Do You Need Workers Comp Insurance for Independent Contractors?

If you’re contracting work to 1099 workers, you may have to buy workers comp insurance for independent contractors. State workers’ compensation laws vary, so it’s best to consult your state’s specific laws to find out what insurance you’re required to carry.

If you work with subcontractors, you might require them to have their own insurance, including workers comp insurance. But depending on your state laws, you might still be required to carry workers comp insurance for your subcontractors. That all depends on your state laws and even the specific type of work your subcontractors are doing.

Regardless of whether you buy workers’ compensation insurance for independent contractors, it’s important to consider the other risks that independent contractors might be exposed to while working for your business. Consider other types of small business insurance, like general liability, errors and omissions, and commercial auto insurance, to protect both your business and the independent contractors.

Do You Need Workers Comp Insurance If You Are Self-Employed?

In most cases, there aren’t any laws requiring you to buy workers comp insurance if you’re self-employed. While not necessarily required by law, you still might want to buy workers comp insurance.

Most health insurance policies won’t cover illnesses and injuries that are related to your work. If you’re self-employed and hurt while working, your health insurance might not cover the diagnosis or treatment you need. Buying workers comp insurance can help ensure that if you’re hurt while working, your medical costs will be covered.

Additionally, some businesses may require any independent contractors working for the company to carry their own workers comp insurance policy. This requirement may be written into your contract, and you might need to show the business proof of insurance before beginning work.

How to Tell If You Need Workers Comp Insurance

The rules regarding workers compensation insurance for self-employed individuals depend on your state. If you’re unsure of whether you need workers comp insurance for yourself or your business, reach out to your local town hall and business administration for help.

How to Buy Workers Compensation Insurance for Self-Employed Individuals

Workers compensation insurance rates depend on many factors, including the type of work being performed and your location. To get the most accurate idea of what workers comp insurance will cost, get a free, personalized quote today. 

Paige Cerulli Paige Cerulli is a freelance content writer and journalist who specializes in personal finance topics. She graduated from Westfield State University and brings more than a decade of professional writing experience to the ConsumerCoverage team. Paige’s work has appeared in outlets including USA Today, Business Insider, and more.


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