Workers’ Compensation Insurance for Contractors

Workers’ compensation insurance helps pay for medical expenses and lost wages after a workplace injury. It can also help to protect your contracting business from significant financial losses after an accident.

Workers’ compensation insurance is also legally required in most states if you have employees. Business owners who fail to comply with state workers’ compensation laws can face serious penalties, including fines or even felony criminal charges.

Why do contracting businesses need Workers’ Compensation insurance?

Contractors sometimes perform physical work, which can increase the risk of injury on the job.

In addition to the costs of medical care, an injury could lead to lost wages if it prevents an employee from returning to work.

You may need to show a contractor’s certificate of workers’ compensation insurance to obtain a professional license, win a bid or comply with state laws. Many clients won’t consider hiring a contractor without workers’ comp insurance.

Check out which states require construction licenses and insurance:

• General contractor license requirements
• HVAC contractor license requirements
• Plumber license requirements
• Carpenter license requirements
• Electrician license requirements
• Handyman license requirements

What does Workers’ Compensation cover for contractors?

Workers’ compensation insurance helps to cover injury-related expenses when an employee gets hurt on a contracting job.

If an employee sustains an injury while using your contracting tools, medical expenses and lost wages can add up quickly. Workers’ comp can help cover medical bills and the employee’s lost income while they recover.

This insurance can also provide compensation if an employee becomes permanently disabled or dies as the result of their injuries.

Workers’ comp can help pay for:

• Medical expenses
• Lost wages
• Retraining
• Permanent injury
• Survivor benefits in the event of an employee death
• Employer liability

Learn more about what workers’ compensation insurance covers.

Do contractors need Workers’ Compensation insurance for themselves?

Workers compensation insurance for independent contractors is usually not a requirement. Sole proprietorships and partnerships are included here, unless and until your business hires employees.

Even though workers’ compensation insurance for independent contractors is not generally required, you do have the option to cover yourself if you choose.

Since rules about who’s required to carry coverage evolve over time, it’s always a good idea to check with your state’s regulatory agency for updates.

Do contractors need Workers’ Compensation for their employees?

As a general rule, workers’ compensation insurance is required for an independent contractor who has employees.

For example, let’s say you own a plumbing business and have four employees on staff. You have workers’ compensation insurance for them and you’ve followed all the guidelines in your state. If one of your employees gets injured while working, he can file a workers’ comp claim and, depending on the policy, receive medical coverage or coverage for her lost wages during his leave of absence.

Does a subcontractor need Workers’ Compensation insurance from an independent contractor?

If you’re a contractor who hires subcontractors, workers’ comp can be a good idea. Let’s say you own a landscaping business and you hire an extra employee who’s an independent contractor. If he doesn’t have coverage for himself, he may be entitled to file a claim against you if he falls down and gets injured while he’s gardening.

Do contractors need Workers’ Compensation from their employers?

As a hired contractor, you are not responsible for whether or not your employer chooses to cover themselves through workers’ compensation.

In some states, you may be entitled to seek compensation directly from the employer, rather than the workers’ comp court. This is called a “non-subscriber case.”

What are some common risks faced by contractors?

Here are some of the common risks contractors could be exposed to at work:

Dangerous accidents

Your W-2 employee suffers severe burns from exposed wiring on the job site and needs to be treated in the emergency room. Workers’ compensation insurance can help cover the medical bills.

Lost wages

Your employee misses time at work while recovering from an injury. Workers’ comp insurance can help cover their lost wages during that time.

Permanent injury or death

Even if you take every safety precaution on the job, there’s always a chance that you or an employee could suffer a life-threatening injury.

In the unfortunate event of a serious accident which results in permanent impairment or death, workers’ comp can help cover long-term benefits, pay for burial expenses or provide survivor benefits to an employee’s family.

Employer liability

You are accused of negligence and an employee gets hurt on the job. If they could decide to file a lawsuit against you, claiming that your actions put them at a greater risk, workers’ comp insurance can help cover your legal costs.

Workers’ comp insurance for independent contractors can help to cover all these risks if you run your own business. Just be sure to add business owner’s coverage to your policy when you purchase it.

How much does Workers’ Compensation insurance for contractors cost?

NEXT customizes workers’ comp insurance to make sure you get the right coverage for your business.

Depending on how many people you need to cover, the type of work you do, the location of your business, and your claims history, workers’ compensation can cost as little as $21 monthly for contractors.**

Generally, contractors in physical trades pay a slightly higher rate due to the risks involved in their work. And the more employees you have, the higher you can expect your workers’ comp rates to be.

NEXT offers tailored business insurance for contractors

NEXT makes it easy to find convenient, affordable options for workers’ compensation insurance. Our simple and straightforward services help you find the coverage that’s right for you.

Everything can be done online on your schedule. Use any computer or mobile device to apply, compare insurance options, purchase coverage and get a certificate of insurance in just a few minutes.

Get an instant quote online today.

More about Workers’ Compensation and Contractors insurance

• Workers’ compensation insurance for retail
• Workers’ compensation insurance for cleaning business
• General liability insurance for contractors