A common practice for the self-employed is to use contractors for certain types of work instead of hiring employees.
There are over 15 million workers in the U.S. who are independent contractors. This shows the shift in employment from working for someone else to working on your own.
As an independent contractor, you get a lot of tax write-offs, but you’re responsible for your own insurance. In many cases, that includes workers comp insurance.
Read on to find out everything you need to know about workers comp for independent contractors.
What Is Workers Comp?
Workers comp insurance is a type of insurance that’s carried by business owners to protect employees in case of illness, injury, or death while on the job.
Workers comp is the foundation of an agreement between an employer and an employee. If an employee gets hurt on the job, they agree not to file a lawsuit against the employer. In turn, the employer agrees to cover your expenses related to the injury.
The employer isn’t likely to have the cash on hand to cover your expenses, which is where workers comp insurance comes in. The insurance policy will take care of your expenses on behalf of your employer.
Workers comp is usually required by law, depending on which state you’re in and the number of employees. As an example, you can read more here about the laws in Georgia.
Do You Need Workers Comp Insurance?
As an independent contractor, the question of whether you need workers comp insurance is bound to come up.
If you have employees or subcontractors, it’s best to have workers comp insurance. Your state may already require it.
If you’re a lone wolf and work on your own, that’s another story. You may not need to get workers comp insurance. However, if you’re performing work for someone else, that’s different.
If you’re a subcontractor working for a general contractor, you’ll want to ask them about workers comp insurance before you start. You want to make sure that you’re covered, especially if you’re doing physical or risky work.
You also want to understand what’s covered in the workers comp policy. Do you get medical benefits? Are there death benefits or lost wage benefits? Some states require those things to be covered and others don’t.
Knowing what your coverage is ahead of time will save you the pain of fighting for benefits after the fact.
Workers Comp for Independent Contractors Is a Necessity
There are a lot of advantages when you’re working for yourself. You get to set your own schedule and you get to write off business expenses on your taxes.
But you also have to take responsibility for your own insurance. If something happens on the job, you’ll want to make sure that your medical and other expenses are being taken care of. Otherwise, you could be in a financial hole.
It makes sense to have workers comp for independent contractors because you know that you’ll have adequate coverage if you get injured at work.
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