Why You May Need Workers’ Compensation Insurance – Even if You Don’t Have Employees

If you’re a solo IT consultant, Workers’ Compensation Insurance may be one of the furthest things from your mind. Why would you need it if you don’t have employees?

Turns out there are plenty of reasons, even if you’re flying solo.

I Work Alone – Why Would I Need Workers’ Compensation?

As the name implies, Workers’ Compensation Insurance pays for work-related accidents or injuries. If you work for a company as a painter and fall off a ladder, your medical treatment and lost wages should be covered by Workers’ Comp.

As an IT consultant, your risks are a lot lower, but you could still get hurt. For example…

  • While carrying a computer tower to your car, you drop it on your foot, breaking both your foot and the computer.
  • Running to answer the phone, you trip over a power cord and fall, breaking your arm.
  • Driving to a client’s office to repair a server, you get into a car accident and suffer a neck injury.

If any of these scenarios occur, what would it mean for your business? If you’re the only employee and unable to work, that probably means your business is no longer generating revenue – and you aren’t getting paid. But if you have Workers’ Compensation coverage, it might help pay your medical bills and your lost income.

I Only Work with One or Two Employees, so I Don’t Need Workers’ Comp, Right?

The short answer: it depends. Every state has different laws on the books regarding Workers’ Compensation. For example, Texas does not require employers to provide Workers’ Comp benefits for employees. Many choose to do so anyway, to avoid the possibility of lawsuits filed by injured employees, but they don’t have to.

In New York, the threshold for requiring Workers’ Compensation is pretty low, according to Nina Kaufman (@NinaKaufman), business attorney and strategist at . “Even if you have one employee, you need to have [Workers’ Comp],” Kaufman says.

In Florida, that number is slightly higher. “It’s not generally required in this state if you have less than four employees,” says Ken Hesser (@kenhesser), partner at central Florida law firm .

Even if you only hire subcontractors that you don’t consider employees, it doesn’t mean your state’s Workers’ Compensation Board will see things your way. In fact, most states classify contractors, freelancers, and subcontractors as regular employees when it comes to Workers’ Comp.

Bob Zeglarski (@BizLawyer), digital entertainment and corporate finance lawyer and founder of (@CutwaterLaw), says an IT freelancer who is bringing on subcontractors might need to consider Workers’ Compensation. “If those subcontractors are working under [the business owner’s] direction, [the subcontractor] may be categorized as an employee,” he says.

How Much Will Workers’ Compensation Insurance Cost My Business?

While every state and industry is different, your premiums probably won’t set your business back too much. Premiums are based on the type of work an employee does, and IT is considered a low-risk industry. You can expect coverage to fall roughly within the following ranges:

  • IT contractors / one-person businesses: $641 to $1,110 per year.
  • Small IT companies (2 to 7 employees): $2,441 per year.
  • Large IT companies (15 to 60 employees): $11,000 per year.

You also need to consider how much you could be saving should an employee or contractor ever get injured by purchasing Workers’ Comp. Without coverage, your business could be forced to pay the entirety of an employee’s medical bills, which could easily exceed what it would cost to buy a Workers’ Compensation policy. Read “4 Tips to Lower Your Tech Firm’s Workers’ Compensation Insurance Costs” for suggestions on how to keep your premiums low.

To learn more about the Workers’ Compensation requirements in your area, select your state from the menu below.

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