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Do I Need Workers' Compensation Insurance?

Updated 01:09 PM EST, Wed March 13, 2019

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When Do I Need Workers’ Compensation?

If your business has employees, most states require you to carry workers’ compensation insurance. But aside from workers compensation laws, this coverage is an important business need.
Workers’ compensation insurance is also known as workers’ comp or workman’s comp. It provides benefits to an employee for work-related injuries or illnesses. Benefits can include:
  • Recovering wages from lost work time
  • Providing a deceased employee’s family with financial assistance
  • Coverage for medical expenses
Workers’ comp insurance can help protect small business owners and their employees in various ways. For example:
  • Say one of your employees works with chemicals every day. Your employee eventually gets sick from breathing in the chemicals every day. Workers’ comp can help pay for their medical expenses while they recover.
  • One of your employees slips on ice outside of your business’ office. She breaks her wrist in the fall and has to go to the emergency room. Workers’ compensation coverage can help pay for the ambulance ride and hospital bill.
  • An employee suffers a needle stick while working on a patient. Workers’ comp insurance can help cover the costs of testing to make sure they didn’t contract any diseases.
Even if you offer your employees health insurance coverage, it doesn’t cover work-related injuries or illnesses. This means in the examples above, the employee’s health benefits won’t provide benefits to cover medical expenses or their recovery. A workers’ comp insurance policy can help protect your employees and provide financial assistance if they’re sick or hurt on the job.

Do I Need Workers’ Comp Insurance If I’m Self-Employed with No Employees?

Most states require coverage if your business has employees. If you’re self-employed with no employees, your business insurance requirements are dependent on the state you’re in. It’s best to check with your state’s requirements to make sure your business is in compliance.
For example, Arizona requires businesses that regularly hire or employ at least one employee to have workers’ comp coverage. This employee could be full-time or part-time. A state may also require employers to purchase workers comp even if the employees are family members.
Other states, like Connecticut, give sole proprietors and single member limited liability companies the option to buy workers’ compensation insurance. In states where coverage is optional, businesses can purchase workers comp insurance from an insurance company, be self-insured, or from a state-funded account.
Some states may also have unique exceptions to the workers’ comp requirements. For example, independent contractors in Arizona don’t need to have coverage.
Make sure you understand what the workers’ comp requirements are in the state your business is in. If you don’t have coverage when it’s mandated, it could be detrimental to your business. Your sick or injured worker could file a lawsuit against your business. You could be financially responsible for paying your sick or injured worker’s medical bills. Your business would also likely have to pay a fine for not carrying coverage. The fine amount varies from state to state, but it can be costly.
If the state you’re in doesn’t require self-employed businesses to be covered by workers’ compensation insurance, consider it to protect your business. Even if you have health insurance, you may not receive coverage if you get hurt or sick while on the job. Without workers’ comp, you would pay for medical expenses out of pocket.

Do Contractors or 1099 Employees Need Workers’ Compensation Insurance?

A big factor into the need of obtaining workers’ comp insurance is determined by the state’s governing body. Each state determines the types of employees that need to be protected by workers’ compensation insurance. Unless a state explicitly says contractors or 1099 employees aren’t mandated to have coverage, it may be best to include them in your business’ policy.
Adding them to your policy helps protect your business. Let’s say you don’t add a contractor to your workers’ comp policy and they get hurt or sick from a work-related cause. You don’t have workers’ compensation insurance coverage for them, so they don’t receive benefits. They could file a lawsuit and you may have to pay for their medical expenses and recovery.
Your business may also receive a fine from the state’s governing body if you were required to have workman’s comp for contractors. Fines and penalties vary, but it could be costly for your business.
Knowing what’s required of your business when it comes to workers’ compensation insurance is important. We’re here to help. Get a quote today online or give us a call at 866-467-8730. Our specialists can help you understand what’s required and the coverage you need to protect your business and employees.

Receive a Workers’ Comp Insurance Quote

Getting workers’ comp insurance can be intimidating. You can breathe easy when you choose The Hartford for your business’ workers’ comp needs. If your employee is hurt or sick, we’ll help them through the claims process. They’ll also have access to specialists that can help them through the recovery process.
Get a quote today and have peace of mind knowing The Hartford is here to help protect you, your business, and your employees.

Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd’s Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. In CA by Sentinel Insurance Company, Ltd. (CA license # 8701) and its property and casualty insurance company affiliates, One Hartford Plaza, Hartford, CT 06155.
The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including issuing company, Hartford Fire Insurance Company. Its headquarters is in Hartford, CT.