Do Self-Employed Or Independent Contractors Need Workers' Compensation Insurance?

do self-employed or independent contractors need workers' compensation insurance coverage

Workers’ compensation covers give benefits to employees if they experience a work-related illness or injury. The coverage helps cover medical costs and can help replace lost wages. When an employee accepts the benefits under worker’s comp then he or she will lose the ability to sue the business for other damages. 


Almost every state requires employers to have workers’ comp insurance for employees. There are different types of employees that need to be covered. If you are the sole proprietor, then you may not need to get insurance for your self-employed business. However, if you work as a subcontractor or contractor then you may need to have workers’ comp insurance if your contract requires it. 

When thinking about whether or not you should get workers’ comp insurance, even if you don’t need it as a self-employed person, keep in mind that your health insurance may not cover work-related accidents. This means if you are self-employed and, while you are working, you injure yourself doing some heavy lifting, your health insurance may not cover the medical costs related to your accident. This same situation will also apply if you are an independent contractor. This is why it can be necessary to have workers’ compensation insurance, even if you have health insurance and the law doesn’t require it. It can help protect you from a financially damaging situation. 

1099 Employees And Workers’ Comp Insurance 

Depending on where you conduct your business, you may heed to have workers’ comp insurance for any independent contractors. If the law requires that contractors and employees need to have this, then you will need to have this coverage. Also keep in mind that workers’ compensation can help provide benefits to cover work-related illnesses and injuries, but even with this coverage, you could still be at risk for other liabilities so it’s important to consider all your business insurance needs. For example, sole proprietors and independent contractors may also need general liability insurance and commercial auto insurance to protect against a wide range of liabilities. 

Reasons To Have Workers’ Comp Insurance 

If coverage is optional for you then there are still some reasons why it makes sense for contractors or sole proprietors to have workers’ comp insurance. 

Work In A High-Risk Industry:  There are some people who face a greater chance of suffering from an injury on the job. Manual labor, exposure to chemicals, or repetitive movements can be some work situations where it makes sense for a self-employed person to have workers’ comp insurance. 

Fulfilling Requirements:  Coverage may not always be optional for those who are self-employed. Certain industries may need workers’ comp insurance in the state even if others don’t. 

Meeting Contract Obligations:  An independent contractor may find that a business will only work with them if they have workers’ comp coverage since it will help limit the business’ liability if the contractor suffers an injury when working for them. 

Most employers will need to have workers’ compensation coverage. If you are self-employed but then hire employees, you are going to need to get coverage for them even if you yourself are exempt. 

Employees Versus Independent Contractors Versus Self-Employed 

Sometimes a business works with independent contractors instead of employees in order to avoid paying for workers’ compensation. This can sometimes work but it’s necessary to know the difference between the two. The difference is a matter of how much control the business has over the work. Employees are told when to do something and what to do and even how to get it done. An independent contractor can determine how to accomplish the work, doesn’t take part in evaluations or training, and purchases their own supplies and equipment. 

There is also a difference between being self-employed and independent contractors. An independent contractor is typically only doing jobs for others and not typically working directly with the customer and the self-employed are customer facing. 

How To Get Workers’ Compensation As A Self-Employed Individual 

Sometimes, it’s not always easy to get workers’ compensation insurance as a subcontractor or independent contractor. Many private companies don’t see one individual as worthwhile to cover. Covering the cost of one person typically has little value to the insurance company. Sometimes a mandate starts when a company hires a certain number of employees, but there are different ways you are able to get this type of policy. Working with a work injury attorney in North Carolina can help you make sure that you get questions answered about on-the-job injuries and if you should be carrying this type of insurance for your business.

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