Workers’ Compensation Insurance for Sole Proprietors
As a sole proprietor, you are generally excluded from a workers' comp policy. However, you may decide to include yourself in the policy either to win a contract or to be covered in the event of a workplace injury. It is important to note that any employees you hire will require workers' comp insurance.
When do sole proprietors need Workers’ Compensation insurance?
As a sole proprietor without any employees, you usually aren't required to have workers' comp insurance, and you're typically not covered by the company's workers' comp policy. However, you have the option to include yourself in the policy for various reasons, such as:
Securing contracts
Do you often need to provide proof of workers' compensation insurance to secure contracts with clients or partners? Including yourself in the policy can help meet these contractual requirements, opening up opportunities for your business.
Personal Coverage
What if you encounter a work-related injury or illness? A workers’ comp policy would cover your medical costs, which is important since health insurance can deny work-related injury claims. It would also cover lost wages and death benefits.
Legal Compliance
If you decide to expand your business and hire employees, workers' comp becomes a necessary requirement.
How much does workers’ compensation cost for Sole Proprietors?
The cost of workers' compensation insurance can vary based on where your business is located, how much you pay your employees, and the type of industry you're in.
For sole proprietors, each state sets a "rating payroll" amount to use for calculating workers' comp costs instead of using their actual payroll. This figure is typically around $50,000. You can find the “rating payroll” for sole proprietors in your state here.
Kickstand tip:
To figure out how much it might cost for your business, it's a good idea to ask different insurance companies for price quotes. This way, you can compare the rates they offer and choose the best insurance coverage for your business.
What are other types of insurance for Sole Proprietors?
In addition to workers' compensation insurance, sole proprietors may also need other types of insurance to protect their business from various risks:
General Liability Insurance
General liability insurance provides coverage for legal costs and damages if your business is sued for causing property damage or bodily injury. It can also cover advertising injury claims, such as defamation.
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, is essential for service-based businesses. It protects against claims of negligence, errors, or omissions in the services provided.
Business Property Insurance
Business property insurance protects your business property, including buildings, equipment, inventory, and furniture, from damage or loss due to events like fire, theft, or natural disasters.
Commercial Auto Insurance
If your business uses vehicles for commercial purposes, such as making deliveries or transporting goods, commercial auto insurance provides coverage for vehicles used in the course of business operations. It can protect against damages resulting from accidents, theft, vandalism, and other perils.
These types of insurance can help safeguard your business from a range of potential risks, providing financial protection and peace of mind.
Get started today!
Kickstand Insurance collaborates with clients in virtually all industries, assisting with finding ideal workers’ compensation insurance within their budget and for the number of employees.
Our team of specialists will lead you through the process, answer your questions, and guarantee that you obtain the necessary coverage without overpaying. Contact us today for a free, no-obligation quote!
Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.
Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.
