Workers' Compensation Insurance for Contractors: How It Works

Workers’ compensation insurance covers potential expenses caused by an injury or illness an employee gets on the job. Although this type of policy is often used in businesses with employer-employee relationships, it also covers contractors in the construction industry.

In most states, it’s necessary to have workers’ comp for contractors if you have employees. Contractors with no employees are typically not required to have workers’ comp insurance, but you can still purchase coverage for yourself if you want financial protection.

Workers’ compensation for contractors provides coverage for both employees and employers in the construction industry. It helps pay for medical expenses and lost wages due to work-related injuries and illnesses.

The construction industry includes many high-risk jobs. Accidents that may cause injuries can occur on the job, and workers could even develop an illness due to the work environment. In either of these scenarios, there might be hefty medical costs and downtime. Having workers’ comp can help manage potential bills.

Workers’ compensation benefits for workers

Workers’ comp can help employees by providing the following benefits:

• Medical expenses: This insurance covers emergency room expenses, hospitalization and treatments.
• Ongoing care and rehabilitation: If either ongoing care, rehabilitation or physical therapy after a work-related injury or illness is necessary, workers’ comp will help pay for these services.
• Income replacement: If the employee can’t work because of a work-related injury or illness, this insurance will help cover lost wages.
• Disability benefits: Workers’ comp even covers temporary and permanent disabilities. If a worker needs time off or can no longer return to work, this coverage will provide disability benefits.
• Death benefits: If a worker dies due to a work-related accident, workers’ comp will provide death benefits to their dependents.

Workers’ compensation benefits for employers

Aside from helping employees, workers’ comp can also be beneficial for employers. It provides employers with liability coverage, which protects them from possible financial loss if an employee gets injured or develops an illness while performing their work duties. Workers’ comp also helps cover legal costs like attorney fees, court expenses and settlements if an employee sues the employer due to a job-related injury or illness.

Although workers’ compensation insurance for contractors provides financial protection in many scenarios, it doesn’t cover injuries and illnesses in certain situations.

Workers’ comp doesn’t cover intentional injuries or those that occur on the employee’s commute to and from work. If the injured employee is intoxicated, workers’ comp won’t cover the injury if it occurs due to their intoxication.

One example of this would be if a construction worker came to work and intentionally smashed his or her finger using a hammer in order to take the rest of the day off. In this scenario, the worker would not receive workers’ comp benefits since the injury was purposeful as opposed to accidental.

There are some instances when workers’ comp insurance for contractors is required. In these cases, it’s important to understand the requirements you need to fulfill.

Subcontractors are professionals performing tasks or providing services on a contract basis. They’re often independent businesses or self-employed individuals. In some cases, it might be required for these individuals to purchase workers’ comp insurance if they have employees. That said, for subcontractors working in high-risk environments, it can be beneficial to carry their own workers’ comp coverage.

Subcontractors aren’t typically considered employees. This is because they work in a specialized area on a job-by-job basis. In some instances, a general contractor may cover subcontractors under their own workers’ comp policy.

Getting the right workers’ comp for contractors will give you financial protection against possible expenses due to work-related accidents or illnesses. We answered some frequently asked questions to help you make an informed decision about your coverage needs.