Most self-employed workers don't need workers' comp insurance, though requirements vary by state and business structure. You need coverage if you have employees or if contracts demand it. The table below outlines whether your specific situation requires workers compensation coverage:
Workers’ Comp Insurance for Self-Employed
Most self-employed don't need workers' comp, but it protects you financially when health insurance won't and lets you meet client requirements.
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Updated: October 27, 2025
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Key Takeaways
You need workers' comp if you have employees, work construction or are a corporate officer, but most solo business owners can skip it.
Even when it's optional, you might choose coverage because clients require it, and health insurance won't replace lost income during recovery.
If workers' comp isn't right for you, consider disability insurance, occupational accident insurance or an HSA to self-insure medical costs.
Do You Need Workers’ Comp Insurance if You’re Self-Employed?
Sole proprietor, no employees | Usually no | Most states don't require it, but you can still buy coverage to protect your income if you get hurt. Many freelancers choose it because health insurance won't cover lost wages during recovery. |
LLC with employees | Yes | Once you hire even one person, you're legally required to have coverage in all states. This is true even if you only have one part-time employee. |
Corporate officer or shareholder | Often yes | Many states treat corporate officers as employees, even if they own the company. For example, New York requires coverage for corporate officers unless it's a one- or two-person corporation where officers own all stock. Check your state's specific requirements. |
Construction/contracting | Usually yes | Most states single out construction work as high-risk. Even if you're a one-person operation, you'll likely need workers' comp coverage to work legally and get contracts. |
Professional services | Usually no | Consultants, writers, designers and other office-based professionals generally aren't required to have coverage, but some clients might ask for it anyway. |
Independent contractor | Depends | You might not need your own policy if you're covered under the hiring company's plan, but many clients now require contractors to carry their own coverage. |
Penalties for Not Having Required Workers’ Comp Coverage
Even if you think you qualify for a workers' comp exemption, getting it wrong means serious consequences. The penalties vary by state, but they're steep enough to make you think twice about going without coverage.
- California: Operating without required workers' comp is a criminal offense. You could face up to a year in jail and fines starting at $10,000. The state can also hit you with penalties up to $100,000 for being an illegally uninsured employer.
- New York:Penalties start at $2,000 for every 10 days without coverage. If you're a repeat offender, fines can reach $50,000.
- Pennsylvania: Intentional noncompliance is a felony punishable by a $15,000 fine and up to seven years in prison. Even unintentional violations carry misdemeanor charges, with $2,500 fines and up to one year in jail.
If you don't have workers' comp insurance for the self-employed and you're caught, money isn't the only thing at risk. States can shut down your business with stop-work orders, ban you from government contracts and hold you liable for all medical costs if an employee gets hurt. This puts your entire business at risk.
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LEARN MORE ABOUT WORKERS’ COMP INSURANCE
If you’re exploring workers' comp insurance for self-employed professionals, get the details on costs, top-rated providers and money-saving options from our guides:
Why Get Workers' Comp Insurance for the Self-Employed When It's Optional?
Just because you don't legally need coverage doesn't mean you should skip it. Many self-employed professionals choose to get workers' compensation even when it's optional because:
- 1Financial protection beyond health insurance
Health insurance covers medical bills, but workers' comp replaces lost income during recovery. A broken arm that keeps you out of work for six weeks could cost you $6,000 in lost earnings, but workers' comp covers about two-thirds of that.
- 2Client requirements
Many clients require proof that you carry workers' compensation for contractors before hiring you. This factor becomes less important if most of your work comes from individual clients or small businesses that don't require it.
- 3Home office accidents count
Working from home doesn't keep you from getting hurt. You can slip down stairs carrying equipment, injure your back moving a desk or develop carpal tunnel from repetitive computer work. Workers' comp covers these work-related injuries.
- 4Business continuity without coverage
A serious injury could force you to shut down your business while you recover. Workers' comp helps keep your business running by covering both medical costs and lost income.
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How Much Does Workers' Comp Insurance for Self-Employed Professionals Cost?
According to MoneyGeek's analysis of workers' compensation insurance rates from major insurers, self-employed professionals can expect these monthly costs:
| Barber | $7 | $85 |
| Beauty Salon | $7 | $88 |
| Computer Programming | $14 | $170 |
| Consulting | $15 | $182 |
| Home-based | $5 | $60 |
| Photography | $9 | $103 |
| Real Estate | $15 | $180 |
| Software | $13 | $159 |
| Tech/IT | $14 | $164 |
| Tutoring | $5 | $60 |
Note: These rates are based on MoneyGeek's analysis of workers' compensation insurance costs by industry and may vary based on business size, location and other factors.
BUSINESS EXAMPLE
For example, Sarah, a freelance graphic designer, pays $27 monthly for workers' comp insurance. She developed carpal tunnel and had to undergo surgery.
Her policy covered $8,000 in medical bills and $4,200 in lost income during her three-month recovery. Without coverage, she'd have faced $12,200 in costs while unable to work, potentially shutting down her business. Instead, she stayed financially stable and got back to designing.
Workers’ Comp Insurance for Self-Employed: Five Decision Factors
Whether you should buy workers' comp insurance for self-employed work depends on your situation. Consider these factors to decide if coverage makes sense for you:
Your industry risk level
High-risk work (construction, landscaping, delivery) makes coverage almost essential. Low-risk professions like writing, accounting, or consulting from home have much less need. Consider how often you're exposed to potential workplace hazards versus sitting at a desk.
Client requirements
Many clients, especially large corporations and government agencies, require proof of workers' comp coverage before hiring you. This factor becomes less important if most of your work comes from individual clients or small businesses that don't require it.
Your financial safety net
If you have 6+ months of living expenses saved and excellent health insurance, you can self-insure. But if you're living paycheck to paycheck or supporting a family, workers' comp provides crucial income replacement that health insurance won't cover.
State-specific requirements
Some states require coverage for certain self-employed work. In states where workers' comp is optional, you have more flexibility to weigh the other factors.
Monthly cost vs. your income
For a tutoring business earning $2,000 monthly, paying $10 for workers' comp is reasonable. For a struggling freelancer earning $800 monthly, that $10 might be better spent elsewhere. Consider the premium as a percentage of your income, not just the dollar amount.
Workers’ Comp Insurance for Self-Employed: Alternative Coverage Options
Traditional workers' comp isn't your only option. Pay-as-you-go workers' comp offers the same coverage with premiums based on your actual payroll, while other alternatives provide different protection levels at lower costs. Here's how these alternatives compare:
Occupational Accident Insurance (OAI) | Medical bills and limited lost wages from work injuries, but with lower benefit limits and less comprehensive coverage than traditional workers' comp. | Self-employed professionals in low-risk fields who want basic work injury protection at a lower cost than full workers' comp. |
Disability Insurance | Replaces your income from any injury or illness (work-related or not), but doesn't cover medical expenses like workers' comp does. | Anyone who wants broader income protection beyond workplace injuries, especially if you already have good health insurance. |
Health Savings Account (HSA) | Tax-free money for medical expenses including work injuries, but provides no income replacement during recovery like workers' comp. | Self-employed individuals with high-deductible health plans who want to self-insure for medical costs but don't need income protection. |
Workers’ Comp Insurance for Self-Employed Professionals: Bottom Line
Whether you need workers' comp depends on your business setup and what you do. Most solo freelancers can skip it, but it's smart to consider coverage if clients ask for it or you want your income protected while you recover from an injury. If traditional coverage seems too much, disability insurance or occupational accident policies might fit your needs better.
Workers’ Comp Insurance for the Self-Employed: FAQ
We answered the most frequently asked questions about workers' comp insurance for self-employed professionals:
How much does workers' comp insurance for the self-employed cost?
Workers' comp insurance for self-employed professionals varies by industry risk level. Low-risk home-based businesses pay the least monthly, while higher-risk professions like legal services cost considerably more.
What factors affect my rates?
Industry risk level is the biggest factor affecting your premium. Your business location, annual revenue, claims history and specific job duties also influence rates.
Do I need workers' comp insurance for self-employed work?
Most sole proprietors without employees aren't legally required to carry workers' comp coverage, but may need other protection like general liability insurance for sole proprietors. However, construction and contracting work usually requires coverage regardless of your business structure. Many clients also require proof of coverage before hiring contractors.
How do I get this insurance as a self-employed professional?
You can contact insurance providers directly or work with an independent agent representing multiple companies to get workers’ comp coverage. It's smart to compare quotes from several insurers since rates vary significantly between companies for the same coverage.
What are the penalties for skipping required coverage?
If you're caught operating without required coverage, the penalties are severe. California fines start at $10,000, and possible jail time is also involved. New York charges $2,000 every 10 days without coverage, and Pennsylvania imposes $15,000 fines.
How We Determined Workers' Comp Insurance Costs
Finding accurate workers' comp rates for self-employed professionals is tricky; most sites focus on larger businesses. We used a consistent profile across all quotes: two employees (three people total, including the owner), $150,000 annual payroll, and $300,000 annual revenue.
This profile represents typical small businesses requiring workers' comp in most states. We chose companies with broad national coverage and online quote capabilities because that's how most self-employed professionals shop.
If you're truly solo, your rates will likely be lower. If you plan to hire employees, these figures show what to expect.
About Mark Fitzpatrick
Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.
Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!
He writes about economics and insurance, breaking down complex topics so people know what they're buying.
sources
- California Department of Industrial Relations. "DWC FAQs for Employers." Accessed August 15, 2025.
- New York State Workers' Compensation Board. "For-Profit Businesses Workers' Compensation Coverage Requirements." Accessed August 15, 2025.
- New York State Workers' Compensation Board. "Violations of Workers' Compensation Law." Accessed August 15, 2025.
- Pennsylvania Department of Labor and Industry. "Coverage and Benefits." Accessed August 15, 2025.