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Workers’ comp insurance for self-employed: do you need it?

02-25-2021

Illustration of woman standing in front of desk in an office for workers' comp insurance self-employed

If you’re self-employed, worker’s comp insurance is not usually a state requirement. Ah, that’s great, you’re probably thinking. I can skip that one.


But before you do, there’s a good reason self-employed people should have a workers’ compensation policy. We’ll get to that. First, let’s talk about what workers’ comp insurance is and what it covers.

What is workers’ comp insurance?


Workers’ compensation insurance protects employers from the cost of employee claims for workplace illness and injury.


A worker’s comp policy typically covers:

• Accidents in the workplace or on-site (including injury or loss of limbs)
• Repetitive motion injuries (such as carpal tunnel damage)
• Cost of medical treatment
• Death (and related expenses)


What’s more, if an injured employee decides to sue, workers’ comp insurance can also take care of the costs of a lawsuit. And as these are currently averaging around $40,000 a-piece, it’s a policy worth having.

Is worker’s comp insurance required for self-employed?

Under state law, if you’re self-employed, workers’ compensation insurance is not usually required. Unless you have any staff. Then, even if you only have one person working for you, it’s the law in most states.

Penalties can be severe. So if you do employ anyone, even part-time, check your state’s rules with your Department of Labor. And remember, if someone works for you in another state, you need to check you comply with the rules in that state too.

If you’re self-employed and you have no staff, workers’ comp insurance is optional. However, there are some situations when it’s a good policy to have.

Why self-employed people need workers’ comp insurance

Picture this:

You’re lifting a heavy box in your office and put your back out. You’re laid-up for two or three weeks, in pain, and unable to work.


Only after some intensive physical therapy are you up on your feet again. And in the meantime, you’ve missed deadlines and lost income.

Now you may have health insurance. But if the accident’s work-related, your policy may not pay out.


That’s when self-employed workers’ comp insurance comes into its own. Because if you suffer an on-the-job illness or injury it covers your medical bills. And if the accident or illness stops you working, it covers your lost income, too.


Now that’s pretty handy, when you’re flying solo isn’t it? Because if you’re laid up after an accident, who’s running your business?


Workers’ comp gives you that extra peace of mind. It means if something happens and you can’t work, your business may temporarily grind to a halt. But your income won’t.

Other reasons to have self-employed workers’ comp


There are a couple of other situations when you may need workers’ comp insurance if you’re self-employed. For instance:


• If you work in a high-risk industry you’re more likely to suffer a work-related injury. So if your work involves repetitive movement, or exposure to chemicals, workers’ comp is a wise precaution.

• In some states self-employed workers’ comp isn’t optional. California, for example, requires self-employed roofers have workers’ comp, even if they have no employees. To be on the safe side, it’s wise to check your state’s Department of Labor.

• If you’re an independent contractor, you may find clients will only take you on if you have a workers’ comp policy. That’s in case you decide to claim against them for injury or illness you sustained while working for them. If you have your own workers’ comp policy, it means your back’s covered too.

For more information read our blog post what is workers’ compensation insurance and why do I need it?


For more on the types of business insurance self-employed people need check out our website. But if you’d like to talk it through, please feel free to call us. We’re always happy to help.

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