Do Sole Proprietors Need Workers' Comp Insurance?
Running a business as a sole proprietor is an exciting venture and an important part of the economy. As a business owner, you may wonder if you need workers' compensation insurance. The answer is yes—sole proprietors should always have workers' comp insurance, even if they are the only employee and even if their state does not require it. Here's why this type of insurance is necessary for sole proprietors.
What Is Workers' Comp Insurance?
Workers' compensation insurance provides benefits to employees who become ill or injured on the job. Depending on the state, these benefits may include medical expenses, lost wages, disability payments, and death benefits for dependents in the event of death due to workplace injuries or illnesses. This type of insurance also serves to protect employers from being sued by employees for workplace injuries or illnesses.
Why Do Sole Proprietors Need Workers' Comp Insurance?
As a sole prop, you are the owner and the only employee, so you may think that insurance isn't necessary. However, sole proprietors so need workers' comp insurance. In the eyes of the law, a sole prop is considered to be self-employed. In other words, if something happens to you on the job, you do not qualify for unemployment or disability benefits from the government.
By purchasing workers' comp insurance, however, you can ensure that you will be able to receive needed assistance. You can even augment your workers' comp insurance with a short-term or long-term disability policy to protect yourself further.
How Much Does Workers' Comp Insurance Cost?
Workers' comp insurance prices vary from state to state depending on what type of work you do. The insurance agency will likely base the cost of your workers' comp insurance policy on your gross sales. In other words, this type of policy can be very affordable for small businesses and sole proprietorships.
Where Can Sole Proprietors Get Workers' Comp Insurance?
Sole proprietors in most states can purchase workers' comp insurance from an insurance agent. Most private insurers offer policies that are tailored to meet the needs of small businesses, including sole props. However, it is important to note that you may not be able to work with your existing insurance agent, as not all agents sell commercial insurance lines. Be sure to get quotes from multiple providers before making a decision about which policy best meets your needs.
Having workers' comp insurance as a sole proprietorship can help protect you financially should you become injured while working on your business venture. Talk to your insurance agent about workers' comp insurance today.
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