Why Workers Comp For Independent Contractors

Workers Comp Insurance

Below we will answer the question why workers comp for independent contractors is recommended for all owner only and sole proprietorships.

State Laws and Contractual Requirements

Many states require workers comp for independent contractors. Even if the law doesn’t mandate it, general contractors and clients may require proof of coverage before hiring you. Without a policy, you could lose out on work opportunities. This is why workers comp for independent contractors is recommended.

Independent Contractors Can Be Considered Employees

In several states, 1099 subcontractors can be classified as employees for workers’ comp purposes. This means you may be responsible for providing coverage for them, even if they are not traditional employees. Failing to do so could result in legal and financial consequences.

Liability for Subcontractors’ Coverage

If your subcontractor’s workers’ comp coverage lapses or denies a claim, you could be left responsible for their medical bills and lost wages. To protect yourself, it’s essential to verify that your subcontractors maintain active coverage.

Cash-Paid and 1099 Workers Are Considered Employees

Workers who are paid in cash or work under a 1099 agreement but don’t have their own workers’ comp insurance are often classified as employees under state employment laws and insurance policies. This means you could be responsible for their coverage in the event of a workplace injury.
This is why workers comp for independent contractors may be necessary for your business if you use 1099 risks.

General Contractors May Require Coverage: This Is Why Workers Comp For Independent Contractors is Essential

Most general contractors won’t hire you unless you have a workers’ comp policy. Why? Because if you or your subcontractors aren’t covered, the general contractor can be charged extra on their own workers’ comp policy. Carrying proper coverage makes you a more attractive and reliable hire.

What Are Ghost Policies?

To meet state and contract requirements at a lower cost, some insurance carriers offer “Ghost Policies.” These policies don’t provide actual coverage but allow independent contractors to comply with regulations. Ghost policies exclude the owner’s payroll from policy premium calculations, potentially saving thousands of dollars while still fulfilling compliance requirements.

Get Workers’ Comp Coverage with Ease

Need workers’ comp? We make the process simple and hassle-free. Whether you need full coverage or a ghost policy, we can help you find the right solution for your business.

Protect Your Business Today

Don’t wait until it’s too late. Get a workers’ comp policy today and stay compliant with state laws and contract requirements. Contact us now to get started! 🚀

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