Most people know that worker’s compensation is a necessary type of insurance to pay if you’re an employer. It’s state law in all states, except Texas. Or if you’ve ever been employed, you might have heard about how you’re covered in your benefits by worker’s compensation. What most people don’t think of looking up is “workers comp insurance for independent contractor.” But if you employ even an independent contractor or are an independent contractor yourself, you may need this type of insurance. So below we’ll cover what it is, how much it costs, and where to find it.
- Top 6 Providers of Workers Comp Insurance for Independent Contractors
- What is a Workers Comp Insurance for Independent Contractors?
- How Much Does It Cost for Workers Comp Insurance for Independent Contractors?
Top 6 Providers of Workers Comp Insurance for Independent Contractors
Worker’s compensation is one of the most common types of small business insurance, so you can find it at a wide variety of insurers. Below we’ve listed some of the top options.
- CoverWallet: Best for comparing several quotes online
- Biberk: Best for saving money
- Hiscox: One of popular small business insurers
- The Hartford: Focus on self-employed and contractors for worker’s comp
- Acuity: A Regional Insurance Provider with Great Customer Service
- Fairbanks: Focus on the construction industry
CoverWallet: Best for comparing several quotes online
CoverWallet is a digital broker specializing in small business insurance. They work with many leading insurance companies. The biggest advantage of working with CoverWallet is that they make it super fast and easy for you to compare several quotes. After filling out their application, which shouldn’t take more than 10 minutes, they are able to provide you with 3-5 quotes from different companies so that you can compare and select the cheapest one for your company.
Below is a quote example from CoverWallet for a landscaping contractor with 4 full-time employees and an annual payroll of $350,000.
As you can see, CoverWallet was able to provide 3 quotes from 3 different companies: Guard, a subsidiary of Berkshire Hathaways); AmTrust, and Chubb. In this case, Guard’s quote is the cheapest. However, it might not be the same for your own business.
I got another quotes for a small accounting firm with 2 full-time employees and an annual payroll of $175,000. Below are the quotes we received from CoverWallet. Again, the whole process doesn’t take more than 10 minutes.
For this accounting firm, AmTrust actually offered a much cheaper quote than Guard. Different companies will offer you different quotes. Be sure to shop around and get your own quotes to compare.
Biberk: Best for saving money
Biberk advertises that you can save up to 20 percent on your business insurance through the company. It’s actually a Berkshire Hathaway company, one of the biggest companies in the insurance world. You can talk to an agent through the 800 number or get a quote online.
To get a quote, we entered in a general contracting business with four contracting employees. When we entered the information and hit submit, we got a message stating that the coverage requires special attention and Biberk wants you to contact it directly.
Hiscox: One of popular small business insurers
Hiscox is one of the best-known companies in the small business marketplace. So it makes sense that it offers workers comp insurance for independent contractor. We entered information for a home improvement contractor. However, the system asks you to designate whether your employees are full-time or part-time. You’d most likely have to contact the company directly to check about insuring contracted workers.
The Hartford: Focus on self-employed and contractors for worker’s comp
The Hartford has a page detailing worker’s compensation for self-employed workers and independent contractors. We entered in a general contractor that does home building and additions to get a worker’s comp quote. However, when we completed the quote process, there’s a page saying the system can’t give us a quote. It looks like you have to contact the Hartford Business Insurance agents to get a quote.
Acuity: A Regional Insurance Provider with Great Customer Service
Acuity offers commercial insurance to a wide variety of business types, like contractors, retail and trucking. In order to get a quote for worker’s comp, you must enter your information into a form and an agent will contact you.
Fairbanks: Focus on Construction Industry
Fairbanks is a commercial insurance broker, offering discount contractor worker’s comp insurance. It provides commercial insurance for construction companies. Currently, it only covers the western states California, Washington, Texas and Nevada, but plan to expand to more states soon. So if you want a company that just focuses on construction, this is a solid option to look into. The company wants you to fill out a contact form to start the quote process.
What is a Workers Comp Insurance for Independent Contractors?
First, worker’s compensation insurance provides coverage for if an employee claims a work-related injury or illness. It can help with medical costs and replace some lost wages. Often, accepting worker’s compensation also means the employee cannot sue your business.
According to the National Safety Council, the average worker’s compensation claim was $40,051 in 2016 through 2017. With costs like those, it’s an important type of insurance to carry.
However, a starting question you might have is why you would need to carry worker’s compensation insurance for an independent contractor in the first place. After all, they’re independent, so that means they take on the burdens like taxes and health benefits themselves. You are not legally required to treat an independent contractor like an employee.
However, you may still need a workers comp insurance for independent contractor. It offers the same protections to contractors as those mentioned above. A few conditions where you may actually need to buy worker’s compensation insurance include:
- State law differs in which types of employees are covered by worker’s compensation, as well as which types of businesses are required to purchase worker’s comp.
- Some contracts require you to purchase worker’s compensation, especially if you are a general contractor or work with subcontractors.
- Some health insurance companies will not cover you if you are injured as part of a work-related accident, so you may want to carry worker’s compensation for yourself as a contractor.
- If you work as a contractor, but hire employees, you will likely need worker’s compensation. It’s even a good idea to carry it for subcontractors in case they try to file a claim against you after they are injured while working.
It’s important to check with state laws regarding worker’s compensation. A good place to start is the National Federation of Independent Businesses, which lists worker’s compensation laws by state. However, you should also check with your state’s Department of Workforce Development or similar governing body.
Do I need workers comp insurance as an independent contractors?
It depends on the state. Independent contractors are exempt from having workers comp insurance in most states. Learn more the exemptions in the top 10 states here. However, in some states, even as an independent contractor, you are required to carry workers comp insurance coverage, like California.
You need to study your state laws carefully to determine if you are required to have workers comp insurance. Regardless the regulations in your state, it is a good idea to protect yourself with workers comp insurance. If you ever get injured or become ill at work, without workers comp insurance, your financial wellbeing will be ruined. This coverage is especially necessary if you are in risky lines of business such as construction or handyman.
Do I need workers comp insurance as an independent contractor in New Jersey?
Good news! Independent contractors in New Jersey are exempt from workers comp insurance. So by laws, you are not required to have the workers comp coverage. However, if your work field is in construction or handyman or trucking or even healthcare or catering, ie. waiting at a busy restaurant, it is a good idea to have workers comp insurance in New Jersey to protect yourself if you ever get injured or become ill at work.
Finding a good workers comp insurance company in New Jersey is relatively easy, learn more at the best workers comp insurance in New Jersey.
How Much Does It Cost for Workers Comp Insurance for Independent Contractors?
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
Insureon, a small business insurance agency, lists median premiums for worker’s compensation 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.
- Worker’s compensation also applies to contractors, the self-employed and subcontractors. If any of these types of workers become injured as part of a job, health insurance may not pay the costs. Other reasons for contractors needing coverage include contract requirements, state laws and or a contractor hiring employees.
- It’s hard to get a price quote, since this is a very specialized situation and companies want you to talk to an agent so that you are getting the right coverage. However, you can find worker’s compensation insurance through just about every commercial insurer.