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Workers' Compensation for the Self-Employed | Pie Insurance

In most instances, if you're self-employed, you won't be required by law to obtain workers' compensation insurance. However, the coverage can be a great way to take care of medical expenses associated with a workplace injury.
Workers' Compensation for the Self-Employed | Pie Insurance

Do I need workers’ compensation if I’m self-employed?

Most states across the country require companies with employees to carry a workers’ compensation policy. However, this isn’t the case for small business owners who are self-employed and don’t have a staff.

Generally, owners who operate a sole proprietorship with no employees or work as independent contractors are not required to have workers’ compensation.

Even though workers’ comp isn’t a requirement for the self-employed, it can be beneficial, especially since some health insurance providers don’t always cover workplace injuries. If you operate in a dangerous industry where the odds of suffering an injury or illness are higher, you should consider purchasing workers’ compensation insurance.

Are there situations where workers’ compensation insurance is required?

If you decide to forgo the workers’ comp coverage, you won’t face any penalties from the government, but you may lose out on business.

Many companies who use self-employed workers will require that their contractors purchase workers’ comp insurance before being allowed to work. Having this coverage helps limit their liability if you get injured during your contract tenure. Some organizations may even ask to see a certificate of insurance to prove that you have the appropriate coverage.

As a small business owner, it’s up to you to decide whether or not to obtain coverage. However, it’s important to note that potential clients are legally allowed not to hire you for the job due to a lack of workers’ compensation insurance.

Benefits of having workers’ comp insurance if you are self-employed

Typically workers’ compensation provides benefits for a company’s employees, but when the owner is the only one working for the organization, the same rules still apply. Having the coverage can come in handy if you get injured during the workday.

Often sole proprietors find that their health insurance will not cover all the costs of a workplace accident, which can lead to paying certain medical expenses and fees out-of-pocket.

While workers comp insurance is often considered unnecessary by some small business owners, the added peace of mind it provides far outweighs the monthly premium cost.

What should you do if you need to hire staff for your small business?

Over time your small business may grow to the point where you decide that you need to hire employees to keep up with the amount of work coming in. While this is a great problem to have, it does open the door to other responsibilities.

The type of workers’ comp obligations you have as a small business owner will depend on whether or not you hire full-time employees or subcontractors.

Full-time employees

Unless you live in Texas, you will need to purchase a workers’ compensation policy once you begin hiring staff. Since each state is different regarding workers’ comp law, you will want to check with your state’s workers’ compensation division to see what steps you need to take to provide the appropriate coverage for your employees.


Not every small business needs to hire staff, and in fact, hiring a subcontractor can be a great alternative. If you are working through a large project, subcontractors can be a valuable resource to help you complete the work but won’t cost as much as retaining a full-time employee. However, similar to employees, you may need coverage for your subcontractors.

Whether or not you need workers’ comp insurance for your subcontractors will depend upon your location. Some states classify subcontractors as employees and require you to purchase workers’ comp.

Other insurance products to consider as a small business owner

In addition to workers’ compensation insurance, there are several other insurance products you will want to consider for your small business. For example, most small business owners are required to have or could benefit from the following coverages:

As a small business owner, it is your responsibility to ensure your company, staff, and yourself have the proper insurance in place to operate.

Remember, every situation is different and state workers’ compensation laws are subject to change, so be sure to do your research and speak with a trusted advisor.

Thanks for reading! Please note that this content is intended for educational purposes only. As laws change regularly, you should refer to your state legislation and/or an advisor for specific legal counsel. If you’re a small business owner, learn more about workers’ compensation insurance or check your current rate in 3 minutes.