Do I Need Workers’ Comp Insurance for Myself? (2023 Update)

Thang Truong
Thang Truong
Updated on:

We’ve all heard of workers’ compensation insurance. It’s insurance designed to protect the employer in the event of a work-related accident or illness. Technically, it also protects the employee from the costs of medical bills following a work-related incident. 

What about sole proprietors and independent contractors? Do they need workers’ comp insurance? What protects them from the financial costs of a work-related accident or illness? 

If you have your own business but no employees, you may wonder if you are required to have workers’ compensation insurance. Have you asked yourself, “Do I need workers’ comp insurance for myself? How would I justify the expense of a policy meant to cover employees at the workplace?” Let’s look at the legal requirements regarding workers’ compensation, when you might need the insurance, and the benefits of having a workers’ comp policy. 


Generally, individual states regulate workers’ compensation insurance. The rules vary slightly depending on your location. Most states (Texas being the exception) require employers to have workers’ compensation insurance. 

The law is different for sole proprietors and independent contractors. Legally speaking, if you are a sole proprietor or an independent contractor working alone, you are likely not required to purchase workers’ compensation insurance. However, there may be instances when you need workers’ compensation insurance. 

When sole proprietors and independent contractors might need workers’ comp insurance

It’s always best to check with your state’s workers’ compensation insurance board before deciding on your need for the insurance. Some exceptional cases should be considered along with your personal need before you make a final choice. Let’s highlight some of the exceptions to the unspoken no workers’ comp for independent contractors rule. Here are a few instances when you might need workers’ comp insurance for yourself.

  • Your state requires it. Some states do require sole proprietors and independent contractors in specific jobs to carry workers’ compensation insurance even if they work alone. For example, a roofer in California would need workers’ comp. Other states have an opt-out clause for sole proprietors and independent contractors.
  • You work with other contractors or in collaboration with other sole proprietors. You both may consider yourselves independent contractors; however, your state may consider your co-collaborator an employee. It’s important to check because you may have to have workers’ compensation policies. 
  • The person who contracted you for the job requires it. Requiring you to have workers’ compensation insurance covers them from liability should something go wrong on the job. Some companies or individuals won’t work with a contractor who doesn’t have workers’ compensation policies—even as an individual. It’s perfectly legal for them to require it. 
  • It’s a financially sound decision. If you don’t have enough money saved to survive if you couldn’t work for some reason, you need workers’ comp insurance for yourself. The premiums might seem a little much when you first start paying them, but in the long run, you’ll have peace of mind that you can provide your needs should you get hurt on the job. 

While these policies might not be necessary, they might be beneficial. Consider the options and the ramifications of not carrying a workers’ compensation policy for yourself. Let’s discuss the benefits of your own workers’ comp policy. 

Learn more at the best business insurance for sole proprietors.

Benefits of getting workers’ comp insurance 

Will workers’ compensation insurance benefit you? If your state doesn’t require it, and they likely don’t, someone who hires you might, or you might decide it’s the right decision for you. So, it seems the answer to, “Do I need workers’ comp insurance for myself?” is maybe. 

Before you make a final determination, you should consider the benefits of workers’ compensation insurance. If you work with subcontractors, having a workers’ compensation policy can help keep you from getting sued in the event of an accident at work. Even if the person you’re working with is a friend, it’s a good idea to protect yourself and them. 

A workers’ comp policy can be especially beneficial if you consistently work alone. As a sole proprietor, you may or may not have health insurance. But did you know that health insurance doesn’t necessarily cover injuries that happen at work? 

What would happen if you were hurt on the job and had no insurance at all? You’d be responsible for medical bills out of your pocket, which would take money away from other responsibilities. Then what is the result of an injury that keeps you from working? No work means no pay when you work for yourself. 

Workers’ compensation insurance typically covers medical bills and lost wages. So, if you have a workers’ comp policy for yourself, you could receive money to keep you paying your bills until you’re back on your feet. If the unthinkable occurs and an accident on the job leaves your family alone, a workers’ comp policy for yourself would help them stay afloat temporarily by paying death benefits. 

How much does workers comp insurance cost?

How much worker’s compensation costs can depending on several factors. These include:

  • Claims history
  • Type of work done (certain work means higher risks to insure, like manual labor-based work)
  • The industry you work in
  • Annual payroll
  • The state your business is located in

We estimate that the median premiums for worker’s compensation for a sole proprietor or an independent contractor at $560 per year, which comes out to under $50 per month.  

This is just the median cost, remember to shop around with a few companies to compare several quotes before making your final decision.

>>MORE: How to Find Cheap Workers Compensation Insurance

Final Thoughts

When it comes to workers’ compensation, the regulations are variable by state. But almost every state in the union requires companies to carry workers’ compensation for their employees. However, the rules aren’t quite as black-and-white for sole proprietors and independent contractors. Being self-employed puts you into something of a gray area where insurance is concerned. 

Your state’s policy will be the ultimate guiding force for whether you need workers’ comp insurance for yourself. However, there are a few other factors that contribute to the decision. Being hired by a company that requires contractors to carry the insurance, working with other contractors, or deciding that it’s a financially sound choice are all reasons to choose a worker’s compensation policy for yourself. 

Workers’ compensation policies can be beneficial, especially to those who don’t have medical insurance or whose health insurance doesn’t cover job-related accidents. Typically, workers’ compensation policies cover medical bills, lost wages, and even certain death benefits. Knowing that you and your family will be covered in the event of a work-related incident can provide you with a sense of peace, so make sure you’re covered.

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Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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