Learn the rules around protecting yourself with your business’ Workers’ Compensation insurance.
As a small business owner, you want to help protect your team from workplace injuries and illnesses with workers’ compensation insurance. But what about you — do you need workers’ comp for yourself?
Many business owners wonder if they should add themselves to their company’s policy. There are a few benefits and drawbacks to consider before you decide. Keep reading to learn why you may or may not want to add yourself to your policy.
Jump ahead to learn:
Business owners often ask if workers’ compensation insurance can help protect them personally — especially if they work alongside employees. While most states still don’t require sole proprietors or partners to carry workers’ comp for themselves, many choose to opt in for added financial protection.
Workers’ comp insurance can help provide financial protection for employees who suffer work-related injuries or illnesses.
It can help cover an employer’s cost for medical expenses, rehabilitation costs and a portion of lost wages. In the U.S., most state laws require workers’ compensation coverage for businesses with employees.
However, just because you pay for workers’ comp for your employees doesn’t mean that you’re covered. Business owners can also benefit from workers’ comp protection.
Without covering yourself with workers’ comp, you might have to pay out-of-pocket medical expenses. Additionally, you might lose income if you cannot work during recovery, potentially leading to financial strain.
Adding yourself to your own insurance is common in the construction industry and other hands-on trades. Many contractors and subcontractors choose to include themselves because contracts often require proof of workers’ compensation coverage before starting a job.
If you’re a general contractor who works on-site with your team, being included under the same policy can help protect you from potential medical costs and lost wages after a work-related injury.
This same applies to other physical professions, like cleaning services and fitness professionals — who face a higher risk of on-the-job injuries.
While business owners are not automatically covered, they can opt into workers comp coverage to get the same protection as their workers. Including yourself in your workers’ comp insurance coverage can be smart for small business owners. Here’s why:
Though adding yourself to your company workers’ comp policy could result in an increased premium, knowing you’re protected in case of a costly work-related injury can help ease strain about the future health of your business.
If you’re self-employed and/or a sole proprietor, the rules and regulations for workers’ comp can be more complex. For example, in some states business owners can opt out, while others require specific forms to exclude themselves from coverage. Because state workers’ compensation requirements vary, check your local workers’ compensation requirements or talk with your insurer to see what applies to your business.
If you’re self-employed or run a sole proprietorship, workers’ compensation insurance is usually optional. But opting in can help protect you if you’re hurt while working for a client or on a job site. Some states or contracts may even require proof of coverage before you start work.
Whether you work independently or manage a small team, it’s worth understanding how this protection differs from your regular health insurance coverage.
Learn more: Do sole proprietors need Workers’ Comp insurance?
Even if you already have health insurance, it may not protect you from the full financial impact of a work-related injury. Each type of insurance serves different purposes, so you may need both to be fully covered.
Your personal health insurance helps cover costs if you get sick or injured, but it may not always cover a work-related injury. Health insurance also won’t cover lost wages if you miss work because you are sick or recovering from an injury.
Conversely, workers’ comp is only for work-related illnesses and injuries. It doesn’t serve as a replacement for traditional health insurance for you or your employees.
Learn more: Workers’ Compensation and health insurance
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Our services are online, so you can get an instant quote, review options and purchase coverage in about 10 minutes. You’ll have immediate 24/7 access to your certificate of insurance as soon as you buy your insurance.
And if you need help, our team of U.S-based insurance advisors is standing by to help if you have any question
Kim Mercado is a content editor at NEXT. She writes and edits content for small business owners, and enjoys helping entrepreneurs solve their business challenges and learn about insurance. Kim has contributed to Salesforce, Samsara and Google.
You can find Kim trying new recipes and cheering the 49ers.
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Learn which industries and states don’t require workers’ compensation insurance.
