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Thursday, April 21, 2022

Looking for information on self-employed worker’s comp insurance? Most states – including North and South Carolina – do not require self-employed individuals to carry workers’ compensation insurance for themselves. Many people elect to buy coverage, especially if there is risk inherent to their line of work. 

Here we’ll address who should consider purchasing a workers’ compensation policy, what the insurance covers, and how much you might expect to pay for coverage. 

Who Should Have Workers’ Comp Insurance?

As a general rule, in both North and South Carolina, sole proprietors, members of a limited liability company (LLC), partners, and independent contractors are not required to have workers’ comp insurance. It’s important to note, though, that solopreneurs might carry workers’ comp to:

  • Fulfill the stipulations of a contract
  • Comply with state law
  • Cover subcontractors
  • Provide peace of mind in a high-risk industry
  • Mitigate setbacks due to work-related injury   

Before we continue our discussion of the self-employed set, let’s talk about employers. In South Carolina, employers with four or more full- or part-time employees are required to carry workers’ compensation insurance; in North Carolina this rule applies to those with three or more full- or part-time employees. No surprise, exceptions to the rule exist. If you have employees and are unsure of your requirements regarding workers’ comp, check in with your insurance provider. Better to be safe than sorry. 

self-employed workers' comp

What Does Workers’ Compensation Insurance Cover? 

Some assume that a health insurance policy is coverage enough in the event of an “on the clock” incident – but not necessarily. Many health insurance providers deny claims regarding work-related illness or injury, leaving the individual on the hook. 

Workers’ compensation insurance, however, will cover lost wages and medical expenses associated with a self-employed individual’s work-related illness or injury – coverage that may prove vital to keeping a business afloat during recovery. 

Workers’ comp coverage may include:

  • Medical expenses for incidents on the job
  • Repetitive movement injury
  • Occupational illness or injury
  • Rehabilitation services
  • Stress-induced mental injury
  • Disability

Workers’ comp coverage will not include:

  • Medical expenses for incidents not on the job
  • Self-inflicted illness or injury
  • Negligence or deliberate carelessness
  • Injuries deemed permanent and stationary 

Whereas an employer communicates with the insurance company on behalf of the injured employee, a self-employed person must provide evidence of illness or injury directly to their provider. Acceptable evidence typically includes doctor’s reports, medical records, and witness affidavits. In some cases, a workers’ compensation investigator may be dispatched to verify circumstance and injury.

self-employed workers' comp

How Much Does Workers’ Comp Cost for the Self-Employed?

Some self-employed individuals and freelance workers may have difficulty securing a workers’ comp insurance, especially from larger companies, and may need to shop around. The chances of gaining coverage from a smaller, private firm are higher.  

On average, a solopreneur can expect to pay about $250 per year for workers’ comp. Actual premiums will differ from one person to the next, of course, depending on:

  • Where you live
  • Your job classification
  • Your income 
  • Your claims history

Your job classification, or class code, represents the level of risk associated with your line of work, and it’s important to get right. Coverage costs will be less for people with a desk job than those on a construction site, for example. Report a code with a less risk than is accurate and face potential penalty, retroactive billing, or even get dropped. Report one with more risk and you may end up overpaying for coverage.

No insurance policy is one-size-fits all – which is why, at Independent Insurance Associates, our business is personal. Connect with us to learn how we can support your insurance needs.