Is Workers’ Compensation Required If You Are Self-Employed?
It also means that you, as the business owner, are obligated to take care of yourself. In the past, that meant being extremely cautious and making sure you had saved enough money to cover yourself if an emergency occurred. Today, many states are allowing individuals who are self-employed the option of carrying workers’ compensation insurance. This increased coverage is beneficial if you are injured while on the job and don’t have enough savings to pay all of your medical expenses.
What Is Self-Employment Workers’ Compensation?
Self-employment workers’ compensation insurance is a policy that guarantees coverage if you are injured while on the job. Individuals who own their company can now purchase workers’ compensation coverage to offset the cost of any medical expenses they incur while working. Self-employment workers’ compensation works just like the workers’ comp policies that are purchased by large corporations. The only difference is that the person purchasing the policy will also be the one who benefits from it if an accident occurs. Premiums are paid into the policy, and the same procedures are followed after an accident happens.
Do I Need Workers’ Compensation If I’m Self-Employed?
No one expects to be injured while they are working. It does happen, however. If you have your own company, it’s up to you to protect yourself. You can do this by taking the necessary safety precautions, but you should protect yourself with workers’ compensation insurance as well. Everyone has a right to compensation if they are hurt while performing duties associated with their employment. If you own the company, you are also entitled to compensation, especially if the accident was beyond the scope of your control. Self-employed individuals who own their business have the same rights as other individuals employed by the company.
Reasons Why You Should Get Workers’ Compensation Insurance Even If You Have No Employees
You must have workers’ compensation insurance for yourself because:
1. It will cover work-related injuries or illnesses that are not covered by your health insurance
Mostly, health insurance policies do not cover medical expenses if you are hurt or get sick at work. However, a workers’ compensation policy will cover such expenses. Also, it will pay a part of your lost wages while you are recovering.
2. Companies/clients will require you to have it before entering into any contract
If a contractor does not have a workers’ compensation insurance policy, the employer (hiring party) will be liable for covering the medical expenses resulting from any workplace accidents. This is why many companies will require contractors to carry their own insurance policy. They will also ask you to submit a Certificate of Insurance (COI) as proof before starting a job.
3. Opting out of Self-employment Workers’ Compensation
Statutes vary from state to state when it comes to workers’ compensation requirements. In states where even self-employed individuals must carry workers’ compensation insurance, business owners can opt out of purchasing the policy. It is up to the owners’ discretion as to whether they need the additional expense of a workers’ compensation policy.
If they choose to opt out of purchasing a policy, they will have to file an exemption or exclusion form with the state in which their business is located. The form is used to verify that the business owner owns the business and that it is their personal decision not to purchase a policy. This also applies to general contractors who you may hire to work for your company. Filing an exclusion verifies that they are working independently and that you do not have to provide them with workers’ compensation insurance.
Filing an Exclusion on Time
Even though you are a sole proprietor, if you are injured while working for another company, that company may be forced to pay you workers’ compensation if an exclusion was not filed on time. The laws for your state will determine how workers’ compensation is applied and whether you must file an exclusion to prevent yourself from paying for a general contractor’s injuries. Knowing the laws and regulations for your state is the best way to keep things fair for both sides.
When you have questions about workers’ compensation coverage for sole proprietors, you need to speak to an expert. Contact the experts at Remland Insurance in Orange, California, to get the information you need to make an informed decision. Speaking to a professional insurance agent will allow you to make a decision that will benefit your business a long way into the future.