Do You Need Workers’ Compensation Insurance if You Are Self Employed?

Do You Need Workers’ Compensation Insurance if You Are Self Employed?

March 12, 2019

Do You Need Workers’ Compensation Insurance if You Are Self Employed?

Workers’ comp insurance in Arizona and other states is a type of coverage that provides financial benefits to replace lost wages and assist with medical bills in the event that an employee is injured while on-the-job. While workers’ compensation insurance is required for employers in most industries and most states, things can get a little bit fuzzy when it comes to the laws surrounding sole proprietors, independent contractors, and freelancers.

In most states, independent contractors are not required by law to carry workers’ compensation insurance. However, the individual rules surrounding workers’ comp insurance vary drastically by state. For example, in Texas, most business owners aren’t required to purchase any type of workers’ compensation insurance. On the other hand, in New York, every type of business must purchase workers’ compensation insurance as soon as they hire their first employee.

Some states’ laws also have specific caveats that dictate which type of independent contractors must carry workers’ compensation insurance. For example, laws surrounding workers’ compensation in Nevada dictate that every relationship in the construction industry is an employer-employee relationship even if the contractor considers him or herself to be an independent contractor. This means that construction professionals are required to act as their own employer in Nevada and purchase workers’ compensation insurance for themselves, a regulation that doesn’t apply to contractors in other industries. Every state has their own individual laws on who is required to purchase workers’ compensation insurance, so make sure you speak to a local insurance expert who knows your area’s laws before you decide to buy.

Even if you aren’t required by law to carry workers’ compensation insurance, you may be leaving you and your business at risk of financial ruin if you don’t carry insurance. If you’re self-employed and you’d like to learn more about how you can protect yourself and your livelihood with insurance, give the team at DJM Insurance Services a call today at 800-763-0698.