What is workers' compensation insurance?
Workers’ compensation insurance helps cover the cost of medical care, disability benefits, and wage replacement if one of your employees experiences a work-related injury or illness. As a small business owner, you are liable if your employees are injured while working for you. Workers’ compensation protects you by ensuring your employees have what they need to recover and heal. It can also help pay for legal fees if the injured employee or their family files a lawsuit against you and your business.
This insurance can also cover loss of life if one of your employees loses their life because of their occupation. Death benefits and funeral costs paid to your employee’s beneficiaries may be covered by your policy. Workers’ compensation insurance is used to cover certain costs in the event of a tragedy.
Do I need workers’ comp if I am self-employed?
Do you have employees? If the answer is yes, then you should have workers’ compensation insurance to protect them and yourself. But what if you have no employees but you frequently work with independent contractors? It depends on whether your state requires it.
Do independent contractors need workers' comp insurance?
Check your local workers’ comp laws to see if workers’ compensation is a requirement. The laws in each state differ, but you typically have to consider what your business is registered as — such as an LLC, C Corp, S Corp, sole proprietorship, partnership, etc. — and how many employees or independent contractors you work with to determine whether or not you need workers’ comp insurance. If you do not have workers’ comp and it is required by law, you may be at risk of facing a fine or jail time.
Workers’ compensation insurance is critical if your employees are involved in high-risk activities where they could become injured or ill, such as occupations in the healthcare industry or construction industry.
What does workers’ comp cover?
The end goal of workers’ compensation insurance is to help the injured or ill employee recover as much of their health as possible so they can move forward from their injury or illness. That means that insurance benefits help pay for medical bills for the employee, but benefits don’t stop there.
While the employee is in the hospital or recovering at home, they won’t be able to work. Workers’ compensation insurance provides paychecks to cover a part of the income an employee may lose while healing. Depending on the extent of the injury or illness and the amount of time spent away from work, this wage replacement can become very extensive.
Here are some of the things that your workers’ compensation policy may cover:
- Long-term disability benefits
- Death benefits
- Wage replacement
- Treatment or rehabilitation
- Employee training if the employee cannot return to their previous position
Do you need workers’ comp with no employees?
Many small business owners believe that they don’t need workers’ compensation insurance because they don’t have full-time or part-time employees. Is that true? Let’s break it down some more.
Do independent contractors need workers’ comp insurance before being hired?
You may find that some clients require that you have workers’ compensation insurance to hire you as an independent contractor. If you have your own policy, it helps protect them from liability. If you want to make sure that you don’t miss out on a contract because of a lack of coverage, it’s best to take out a workers’ compensation policy. This may be required whether or not you have employees.
Is workers’ compensation insurance required for hiring contractors?
Depending on the state in which you do business, you may be required to have a workers’ compensation policy if you work with contractors or subcontractors. Connecticut, Georgia, Louisiana, and Tennessee are some of the states that have unique workers’ comp laws related to contractors and subcontractors.
How can I get workers’ comp insurance as a self-employed worker?
There are several workers’ compensation policies designed specifically for self-employed workers. It’s best to partner with a company that specializes in insurance for independent workers and small businesses, such as Woligo, to find the best policy for your situation.