Even if it weren't the law in most states, more employers than not would likely invest in workers compensation insurance. This is the case because it's the easiest solution to the risk of workplace injury.
If an employee is injured in the course of performing their duties, that's probably going to fall into your lap in one way or another. If it doesn’t end up as a workers compensation claim, you’ll likely have to deal with the fallout through your general liability insurance or by paying out of your own pocket. No matter what you're paying for workers compensation insurance, it's a lot less than paying those benefits yourself.
But what about the self-employed? You're probably not going to sue yourself for damages if you're injured on the job. But your income has to come from somewhere. If you're running a business of one, your whole company is resting on your capabilities. An injury might set both you and your business back — undoing months or years of carefully building your brand.
So, while you're not required to carry workers compensation insurance for yourself, it wouldn't be a bad idea.
That being said, there are some factors when determining whether workers compensation insurance is worth the investment as a one-person company.
- The nature of your work and your industry. If you're a general contractor who fixes roofs and installs HVAC's, then it would be foolish to go without workers compensation insurance at your job. On the other hand, a website designer only needs to worry about carpal tunnel syndrome, which is easy enough to prevent with regular breaks and wrist exercises. Assess the inherent dangers of your workplace and proceed accordingly.
- Your income situation. Is this your primary income? Business insurance is a necessity for people who rely primarily on their business to make a living. Not all businesses function as a primary source of income, though. For some of us, our home business is something we do on the weekends for fun and a little extra cash. It's worth considering whether your business is bringing in enough income to buy insurance in the first place.
- Your future plans. Are you ever going to expand? Even if you don't want to buy workers compensation insurance for yourself, it may be worth having an established relationship with an insurer when you're ready to hire.
When running a business on your own, insurance is generally at your discretion. But don't go without insurance that you need.
ALSO READ: Four Tips for Buying Workers' Compensation