Is Workers’ Comp Needed by the Self-Employed?

Workers’ compensation insurance is an unavoidable requirement for most business owners. The primary purpose of such insurance is to provide workers with sufficient compensation to cover lost wages and medical expenses if they are hurt on the job or while performing a work-related activity. Employers are required to carry the insurance for their employees, but it may be a different story for someone who is self-employed. Self-employed individuals and independent contractors may file an exemption, stating that they are not obligated to purchase the insurance for themselves.

The Need for Workers’ Compensation Insurance

Some businesses carry minimal risk in the way of an injury-related accident. If an individual is self-employed and has no other employees, they may opt-out of purchasing workers’ compensation. While there may be a need for a liability policy, liability does not fall under the scope of a workers’ compensation policy. Instead, it would be part of a commercial policy that would cover the business itself, not the employee/owner.

Independent Contractors and Workers’ Compensation

Independent contractors may have the option to purchase workers’ compensation, or they may choose to rely on the businesses they work with. When an independent contractor works on a project for another company, such a company may have to pay the contractor’s workers’ compensation claim. Therefore, if you are an independent contractor, before you work with any company, ask them about their worker’s compensation and whether it includes independent contractors. In most cases, some form of coverage will surely apply.

Self-Employed Business Owners and Workers’ Compensation

Individuals who own their own company and have no other employees may choose to purchase a policy just for themselves. The type of business they own will play a role in their decision to spend the extra money. The owner is in charge of what risks they choose to take, so purchasing a workers’ compensation policy may not be necessary. If the business does face some level of risk, purchasing a policy will allow the owner to receive the compensation needed to stay on track financially.

Filing an Exemption

Suppose an independent contractor or self-employed business owner decides they do not want to take on the additional expense of purchasing a worker’s compensation policy. In that case, they can file an exemption with their state. By filing an exemption on time, they will not have to purchase the insurance. However, it is essential to know the risks, and talking to an insurance agent who is knowledgeable about workers’ compensation is an excellent way to make an informed decision.

Worker’s compensation insurance offers many benefits to those who are self-employed. However, it depends on the business owner, whether he is willing to purchase the policy. Do you have additional questions about workers’ comp? Contact the experts at VGW Walker Insurance in Texas, today. We are ready to help you with all your coverage needs.