If you have no employees or only work with 1099 contractors, read this before renewing your workers’ comp policy.
Business owners across the U.S. are constantly told they must carry workers’ compensation insurance — even if they don’t have a single W-2 employee on payroll. Many business owners are unknowingly paying for coverage they don’t actually need.
✅ What Is Workers’ Compensation Insurance?
Workers’ compensation insurance covers medical expenses, lost wages, and rehabilitation costs if an employee gets hurt on the job. But here’s the thing: It’s designed for W-2 employees — not 1099 contractors.
❗ Why Are Business Owners Required to Have It?
Every state has its own rules. But generally, you’re required to carry workers’ comp if you have a certain number of W-2 employees, you work in high-risk industries like construction, or the state believes your 1099s are really employees in disguise.
🤔 What If You Only Have 1099 Contractors?
If your workers are truly independent contractors, many states don’t require you to carry workers’ comp for them. But your insurance carrier or the state may still demand proof they aren’t misclassified.
🔄 What You Can Use Instead
If you’re only using 1099s, you can:
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Require them to carry their own workers’ comp insurance
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Have them sign a Certificate of Independent Contractor or Waiver of Coverage
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File a waiver or exemption form for yourself or them (depending on state laws)
📝 What Is a Waiver of Exemption?
A Waiver of Exemption is a legal form that declares you or your contractors do not need workers’ comp coverage under current state law. By filing this waiver, you can avoid being forced into unnecessary insurance — and it can reduce your premiums significantly.
