When Do I Need to Buy Workers&x27 Compensation Insurance? | Insureon

Workers’ compensation insurance provides valuable protection for you and your employees. ensures that injured workers receive the lost wages and care they need regardless of fault. In return, employers are protected from costly employee lawsuits for on-the-job injuries. That’s why workers’ compensation coverage is required by law in most states if you have employees.

Whether you’re running a well-established business or just starting out, it’s crucial that you understand when to purchase workers’ compensation insurance.

Reading: When do i need to buy workers compensation insurance

In most states, you must purchase workers’ compensation insurance as soon as you hire your first employee. not only is it probably the law, but it’s also crucial that you have coverage as soon as possible. Even if you are a sole proprietor of your business, you may be required to have workers’ compensation. for example, you may need it to obtain a contractor’s license depending on the state in which you work.

Without it, you’ll have to pay out-of-pocket costs, because your health insurance won’t cover medical bills associated with an employee’s work-related injury or illness.

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Failure to comply with state workers’ compensation laws could also result in civil or criminal penalties.

how the location of your business affects whether you are required to carry workers’ compensation insurance

Each state’s workers’ compensation laws are different. You will need to familiarize yourself with the workers’ compensation laws of the states in which your business operates. For example, if your business is based in one state but employs people in another, you may need to purchase coverage under the laws of each state where your employees work.

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The number of employees you have will also affect when you need to purchase workers’ compensation insurance. In some states, any business with an employee is required to carry workers’ compensation. in others, the requirement may be two, three, or five employees. Even if your employees are corporate officers or family members, they likely should be covered under your workers’ compensation policy.

Just as each state has its own regulations regarding when employers must carry workers’ compensation coverage, workers’ compensation insurance requirements and exemptions also vary.

For example, some states require anyone employed in the construction or roofing industries to be covered.

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Other common questions about state workers’ compensation requirements include:

Do independent contractors need workers’ compensation coverage?

If you are self-employed or a sole proprietor and have no employees, you generally are not required to purchase workers’ compensation for yourself. however, some companies require the independent contractors they work with to carry workers’ compensation insurance to reduce their own liability.

Even if it’s not required by law or contracts, it may be a good idea to get workers’ compensation coverage to cover your medical bills and lost wages if you’re injured while working.

Do you need workers’ compensation coverage for part-time employees?

If workers’ compensation is required for full-time employees in your state, you can expect it to be required for part-time and seasonal employees as well.

do you need to buy workers compensation for subcontractors?

You may be required to purchase workers’ compensation insurance for subcontractors, depending on how your state determines who is an employee. Your state may also require you to provide this coverage even if your subcontractors already have their own workers’ compensation insurance policy.

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