Is workers compensation insurance needed to open a business?

Answer 1

I can't sue myself

It is my understanding that the provisions generally applicable through the terms of a workers compensation policy are intended to provide relief to an employee who, while engaged in the normal course of their working duties becomes injured in some way. This general set of provisions is construed to mean that an employer-employee relationship exists. In an instance where someone is self-employed, the employer-employee arrangement would be difficult to support in argument; and, therefore, the provisions for application of any relief through such a policy would be inapplicable. The purpose of this type of coverage would be misapplied if used. The proper insurance for the owner of a business doing the sole work effort themselves in addition to administrative tasks would be of a different form, usually of a personal-policy nature. It would be difficult for a person to sue themselves in order to receive relief through administration of a workers compensation policy via the courts. The proprietor of such a business would be likely viewed as having the same status as a private contractor, and an entity of one.

Edits welcome.

This is my (not the author's) addition to the well written answer above for Michigan Workers' Compensation question:

If you want to be covered under a WC policy you can have yourself listed on the policy. Typically for a sole proprietor, they are a sole bread winner and just want jobs and don't want to pay for insurance or WC insurance coverage. WC coverage typically needs to be for a Partnership, LLC or a Corp. On your policy, it is important that you are not "excluded" so the officer, member or partner is not excluded on the policy if you desire coverage in the event of a Workers' Compensation claim. If you have no employees and want to be excluded, this link may help: http://www.michigan.gov/documents/cis_bwuc_contr_29680_7.pdf

Make sure that subcontractors that you hire have WC coverage if you use them, or you will be paying their wages/costs under your name come audit time if the insurance company chooses an audit.

Answer 2

I believe that it depends on the state you live in and how many employees you will have. In Michigan if you have more than 4 additional employees you have to have it.

AnswerAll 50 states require Workers Comp though most if not all have exemptions. In Texas, you can select a Non-Subscription product that's similar to Comp. Most if not all states allow you to self-insure if you have enough cash to set aside. Even if you exercise an exemption, you remain liable, so make sure you have plenty of cash for work-related injury claims if you don't carry coverage. Also, even if you don't think your employee would sue, their spouse or minor children who have to get through life on your employee's reduced salary if he has a major injury, or without his salary and companionship if he dies, may present an issue. In short, yes, please carry Comp.

Answer 3

Depends what state you live in . Here in Kentucky you are required to have workmans comp, even if you are the only employee. In Kentucky you cant sue your employer if you get hurt on the job , in most cases. All 50 states require Workers Comp though most if not all have exemptions. In Texas, you can select a Non-Subscription product that's similar to Comp. Most if not all states allow you to self-insure if you have enough cash to set aside. Even if you exercise an exemption, you remain liable, so make sure you have plenty of cash for work-related injury claims if you don't carry coverage. Also, even if you don't think your employee would sue, their spouse or minor children who have to get through life on your employee's reduced salary if he has a major injury, or without his salary and companionship if he dies, may present an issue. In short, yes, please carry Comp.

Answer 4

Each industry has it's own rules. Some need WCB only if they have certain number of contracts. You'll need to call WCB and find out what the rule is for your profession.

Answer 5

Workers Compensation insurance is needed if you are going to have someone working for you, it definitely would be a good ideal to get it.

Answer 6

No. When they file corporate documents as the principal they are exempt.

Answer 7

yes, any business needs to have insurance ,if they have a employee on the books.