Working for yourself has significant benefits: you’re in charge of your own professional direction, your schedule is up to you, and you control how you do your job. Whether you’re an independent contractor or a sole proprietor, being your own boss has disadvantages, too. Employees of even small companies in Iowa are protected by laws like minimum wage and are entitled to benefits from workers’ compensation if they are injured at work. You may be surprised, however, to learn that workers’ compensation protections are also available if you work for yourself.
Workers Comp Insurance for Self Employed
Workers’ compensation is a system of private insurance coverage that works like any other insurance: covered entities pay monthly premiums and, if something happens that’s within the scope of the policy coverage, make a claim for reimbursement to the insurer. These policies ensure that employees who get hurt on the job are compensated for their injuries and lost wages.
Workers’ compensation is not a state or federal program, although the state of Iowa requires that businesses carry workers’ compensation insurance. In this way, workers’ comp insurance is much like vehicle liability insurance. For both kinds of coverage, you are entitled to obtain a policy from the carrier of your choice, so long as it meets the state coverage requirements; however, if you don’t carry insurance, you may be fined regardless of whether you actually experience an occurrence that triggers a claim (e.g., a claim or an accident).
How Does Buying Your Own Workers’ Compensation Work?
Iowa only requires workers’ compensation protection to cover employees of Iowa companies for work-related injuries. This means that independent contractors (who may do work for multiple companies), self-employed individuals (sole proprietorships), and partners or members in a limited liability company (LLC) aren’t entitled to the protection or benefits of anyone else’s workers’ compensation insurance.
Although the law doesn’t require it, these kinds of workers can choose to carry their own workers’ compensation insurance. For these individuals, workers’ comp insurance is more like homeowners insurance. Although the state doesn’t require you to carry this protection, for a relatively small monthly fee, it can compensate you for large losses that result from covered occurrences. Many major insurance carriers offer workers’ compensation policies; Iowa has a private market, which means you can purchase workers’ compensation insurance from any private insurance carrier or agency that is licensed by the Iowa Insurance Division.
If you are properly classified as an independent contractor, even if you work primarily for one company and are injured on their premises while performing work, you will not be covered by their workers’ compensation insurance. (Many workers aren’t properly classified as independent contractors; if you believe you have been misclassified and should be entitled to workers’ compensation benefits as an employee, you should contact an attorney.)
Why Get Workers’ Comp Insurance For Self Employed If It’s Not Required?
If you’re an independent contractor, sole proprietor, or member of a partnership or LLC, you should investigate your options to obtain your own workers’ compensation coverage—especially if you work in an industry or location with high risk of on-the-job injuries. Workers’ compensation will pay or reimburse you for
All reasonably necessary medical care related to the treatment of a work-related injury, including hospital care, doctor visits, prescriptions, physical therapy, rehabilitation, and more, regardless of whose fault the injury is.
Necessary transportation expenses (whether by car, bus, or transportation service) to get to and from your medical providers.
Wage replacement benefits, including temporary total disability, temporary partial disability, healing period, permanent partial disability, and permanent total disability benefits to ensure you maintain an income despite your injury.
Death benefits for your dependents if you are killed in a work-related occurrence.
Obtaining a workers’ compensation insurance policy while self-employed can mitigate the uncertainty of running your own business or making a living off contract work. Although it’s not required by law, it can help protect you and your family from the devastating consequences of injuries in the workplace.
If you are concerned that you may be misclassified as an independent contractor or need advice about any aspect of the self-employed worker’s comp system, contact the Platt Law Firm. We have the experience and skill to help you understand your rights to workers’ comp benefits and navigate the system, even while you may be recovering from an injury.
Contact us today to schedule a consultation in Des Moines and Urbandale, Iowa.
Contact us today to schedule a consultation.