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Do Independent Contractors Require Workers Compensation Insurance?

May 25, 2022

Contractors Insurance

Do Independent Contractors Require Workers Compensation Insurance?

Workers compensation pays for lost wages and medical costs resulting from workplace injuries and illnesses. This policy is state-mandated in almost all US states for companies that have employees. Therefore, if you work for yourself and don't have workers, you're not typically required to carry workers compensation insurance. However, in some situations, it may be necessary to have workers comp insurance.  Read on to learn more.

You May Need Workers Compensation if the Businesses You Work with Require It

If you’re working for another business as an independent contractor, the business’s workers comp policy won’t cover you. This means if you suffer a work-related injury or illness, you won't get workers comp benefits. If you're injured at work, your lost wages, medical bills, and rehabilitation services won't be covered.  If you don’t carry workers comp, a lot of companies won’t afford the liability that comes with your working for them. Such companies will typically ask you to present a Workers Compensation Certificate of Insurance to prove that you have a workers comp policy. Some firms, especially construction businesses, will never work with you unless you present proof of insurance. 

In some states, businesses that hire subcontractors are required to carry workers comp insurance. Even if your subcontractors have workers comp coverage, you may still be required to have a workers comp policy that covers them. The laws governing workers compensation insurance vary by state. So, if you're a small business owner, independent contractor, or self-employed, it can be confusing to know whether you're legally required to have workers comp coverage. For instance, in New York, you’re required to get coverage as soon as you hire an employee, but in Texas, the state doesn't mandate workers comp insurance. Therefore, you should adhere to your state’s workers comp legislation.

You May Decide You Want the Protection Workers Compensation Insurance Offers

If you’re not covered by workers comp insurance and get injured at work, your medical expenses for diagnostic procedures, emergency room visits, surgeries, doctors’ appointments, prescription medications, and more can add up quickly.  You might also lose money and time while you're recuperating. With a serious injury, your business may even be permanently ruined. So even if the law or another company doesn't mandate you to carry workers compensation insurance, you should consider getting it because it can be invaluable.

How to Get Workers Compensation as an Independent Contractor

Workers comp coverage for independent contractors isn't provided by all insurance companies. If you're looking for workers comp coverage, you should start with insurers that target small businesses. Here are the steps to follow when shopping for the best workers comp coverage for your business:

  1. Assess your state’s workers comp requirements.
  2. Identify the steps you need to take to get a workers comp estimate.
  3. Get a quote.

Whether you consider yourself as a subcontractor, 'solopreneur,’ freelancer, or subcontractor, and whether your business is structured as S-corp, single-member LLC, or sole proprietorship, workers compensation insurance can provide you with the necessary financial protection if disaster strikes. There is a great deal of security that comes with knowing that your insurance coverage will kick in and cover lost wages, medical bills, vocational rehabilitation, and death benefits in case you get a work-related illness or injury.

How Riverbend Insurance Can Help

If you’re looking for the best Contractors Insurance in Denver, CO, contact Riverbend Insurance now. Whether yours is a huge company or a one-person enterprise, our qualified and experienced agents will help you get the most cost-effective and best-customized insurance policies for all your needs.