Being self-employed allows you to do business your way. Whether you are running an online store, building web apps, or providing pet care, you will need to make big decisions about how you establish your business practices, including accounting, taxes, and the types of insurance you carry.

Because there are large differences in self-run business models, it can be confusing to determine the best practices around self-employed workers’ comp insurance. You will want to consider legal requirements for your state and industry, the needs of your business, costs to insure versus costs of operating without workers’ compensation, and what you want from a workers’ comp plan.

Here are a few common questions that self-employed individuals ask to determine whether workers’ comp insurance is the right move for their business.

Are Self-Employed Individuals Required by Law to Carry Workers’ Comp Insurance?

For most people who are self-employed, workers’ comp is optional, but there are some exceptions. If you are self-employed in an industry that has a greater risk of accidents on the job, your state may require you to carry workers’ compensation.

To learn more about your state workers’ compensation laws, you can visit the Department of Labor’s State Workers’ Compensation Officials website for details about your state’s rules and contact information.

Why Would a Self-Employed Person Need Workers’ Comp?

Even if you are not required by law to have workers’ comp as a self-employed individual, there are reasons that you may want coverage. Holding workers’ compensation insurance can be a benefit to your business in certain circumstances, such as:

  • Personal coverage. When you are working for yourself, you have no one to continue your business if you have an accident on the job. Workers’ comp protects your company should you become injured while at work.
  • Contract requirements. If your profession includes taking on jobs from clients, you may have to agree to contractual terms as part of your work. Some clients may require you to carry workers’ compensation for protection during a job.
  • Growth potential. Should you need to bring on employees or subcontractors to meet your business goals, you may be required to have workers’ compensation. If you already have coverage, you are ahead of the curve and ready to grow.

How Much Does Workers’ Comp Insurance Cost?

Self-employed workers’ comp insurance costs will depend on your state, industry, and history of workers’ comp claims. As you evaluate the cost of coverage, it may be useful to contrast it with what your potential losses could be if you were injured at work.

Ambulance and emergency room care, medical and recovery costs, and partial coverage of lost wages may be covered with workers’ comp. Consider how that protection could buy your business extra time, should you be injured while on a job.

Help for Small Businesses

The drive of self-employed people to maintain their independence at work is understandable. That’s why companies, such as workers’ compensation insurance providers, wanting to partner with the self-employed must be committed offer a clear, stress-free process that allows our customers do business their way. They must provide flexible, affordable options to get the coverage needed to get the job done and prioritize a customer’s time in providing quotes, updating a policy, or answering a question. Such companies will also keep communication quick and to the point and provide free online quote tools to make it possible to buy a policy in minutes that covers the business for the year ahead.

Dennis Dix is Chief Operating Officer at Cerity. Dix Dennis is charged with reimagining how workers’ compensation insurance is priced, purchased, and maintained. Cerity is a data and analytics start-up based in Austin that empowers small business owners with the knowledge and tools they need to confidently purchase workers’ compensation insurance directly from an insurance company. For more information, visit: For more small business tips, follow Cerity on Twitter at @CerityisHere.

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