Sole proprietors often work alone and are not required to carry workers' compensation insurance. There are no employees other than themselves so there is little risk of someone being injured while on the job. While it is still possible for sole proprietors to purchase a workers' comp policy for themselves, most can buy with purchasing health insurance that will cover them if they are injured on the job.
As a sole proprietor, you need some type of insurance to cover your medical expenses. You have two main options. The first is a quality workers' comp policy that will cover both your medical expenses as well as any wages you may lose from being off of work. The other option is to purchase traditional health insurance that will at least cover your medical expenses while you are off of work. Working without any type of health insurance can spell disaster even if you only receive a small injury.
Some clients may require that you have a workers' comp policy in place before you start working on their property. Even though they have a business policy with liability coverage, it offers an additional level of protection for them. Having your own workers' comp policy ensures that you have the coverage you need to take care of any work-related medical bills and time off of work. This protects you in case the client you are working for doesn't have sufficient coverage.
Many sole proprietors will hire subcontractors to help them complete large jobs. If you plan on hiring a subcontractor, it's important that you invest in a good workers' comp policy. In some states, subcontractors are considered to be employees. This means they get the same level of protection while they are on the job. Providing them with workers' comp not only protects you and the subcontractor but also keeps you in business without affecting your company's financial health. Having the right type of insurance in place is the best way to prevent future financial difficulties.
Seasonal workers or subcontractors that receive 1099 forms at the end of the year may be considered employees, depending on what state you live in. The biggest distinction is that if a subcontractor only works with other professionals and does not offer similar services to the public, they may be classified as an employee by your state's department of labor. If you are unsure of how they will be classified in your state, contact your insurance agent and ask about the labor laws you will be working under.
As a sole proprietor, it's important that you protect yourself and others while you are on the job. When you have questions about workers' comp insurance, you need to talk to insurance agents who have experience working with this type of insurance. Contact our agents at Little & Sons Insurance Services today to find out more about how a good workers' comp policy will protect both you and your business from financial hardship.
