Do self-employed or independent contractors need workers’ compensation insurance?

We are not familiar with any states having a direct requirement for self-employed individuals or independent contractors to purchase work comp insurance.  However, requirements can be imposed contractually by third parties regardless of state regulations. 

Many general contractors, project managers even commercial landlords will require vendors, subcontractors and tenants to obtain workers’ comp coverage as a condition of their contractual agreement.  All are concerned with the vicarious liability they may take on because of the requisite relationship between themselves and the other party to the contract. 

For example, a commercial landlord may be concerned that if a tenant’s employee is injured on the landlord’s property, that employee may seek compensation for their injuries from the landlord if the employer has no workmans compensation coverage to respond to the injury. 

Most states will allow an injured employee of a subcontractor to obtain benefits from the general contractor if the subcontractor has no workers compensation insurance. To protect themselves, the general contractor will require subcontractors to purchase work comp coverage. 

Workers compensation insurance carriers providing coverage to general contractors and others with subordinate relationships will impose an obligation on the general contractor to guarantee their subcontractors have proper work comp insurance.  If the general contractor fails to meet that obligation, the workman comp carrier will charge additional insurance premium similar to what the subcontractor would have paid for the coverage.  Imposing coverage requirements along with penalities for failing to meet those requirements creates disincentives for those who would skirt their work comp obligations.

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