Workers' comp waiver: Do you qualify?
Most states require businesses with employees to carry workers' compensation insurance. However, it's sometimes possible to get a waiver of your workers' comp requirements.
Workers' comp waivers can come from a client
In many cases, when you’re contracting with a larger company, they include language in their contracts requiring an independent contractor to carry workers’ compensation insurance.
This is a standard legal protection that helps your clients manage their costs. Rather than paying for the cost of your coverage themselves, they make you pay for it.
But in some contracts, you’ll find language that states you can waive your workers’ comp requirements. This typically applies if you’re the sole person involved in the contract.
If you don’t have employees and you’re comfortable with self-insuring, you may be able to sign a waiver saying you’ve chosen not to secure workers’ comp coverage. (Remember that you'll have to pay your own medical costs if you’re injured on the job.)
Why bother with the waiver in the first place? Again, it provides legal protection for the company you’re working with. By getting proof in writing that you gave up your right to protection from workplace injury, your clients are covered in the event of a lawsuit.
Workers’ comp waivers can come from state laws
The other scenario in which you might be able to waive your workers’ comp insurance requirement has nothing to do with your clients.
In this scenario, you live in a state that doesn’t require you to carry a workers’ comp policy. Many states give you the option of opting out of coverage if:
- You have no employees.
- You have employees but choose not to cover yourself with your policy.
In much of the country, workers’ compensation laws essentially give you the option of saving money by not covering yourself. However, you can't make that decision for your employees. If you have employees, you're responsible for paying for their workplace injuries.
If you decide to skip this coverage, make sure you have enough money to afford your medical bills if you’re hurt at work.
Find workers' comp requirements in your state
Ask your insurance agent before waiving your workers’ comp coverage
Workers’ compensation is a complex topic. If you’re not an expert, it’s a good idea to talk with an insurance agent before making a decision either way about your coverage. Your agent can help you understand the possible ramifications of foregoing coverage and whether the financial savings are worth the increased risk.
If you don’t yet have an agent, feel free to contact us for more insight on your company’s workers’ compensation requirements.
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