Sole proprietor workers’ comp can cover medical exams, tests, and surgeries for workplace injuries and illness — even after you return to work.

If you’re unable to work as the result of a workplace injury or illness, you could receive a portion of your wages in a lump sum or in weekly installments.

Benefits can help cover physical therapy and ongoing care to help you recover and return to work from a workplace injury or illness.

Workers’ comp is designed to provide benefits to you, including lost income. However, it doesn’t cover the cost to hire someone to replace you if you're unable to work as the result of a covered illness or injury.

Sole Proprietors Workers’ Compensation Insurance

Q: Funerals and survivor benefits

Workers’ compensation also can help pay for a funeral and other end-of-life costs due to a workplace injury or illness.

Q: Client or vendor accidents

Sole proprietor workers’ comp typically covers only you as the business owner. If someone other than you is injured in the course of your normal work, they may be covered by general liability insurance, which we recommend for small business owners.

Q: Work safety improvements

While creating safety programs can help reduce workers’ comp premiums, the costs of safety enhancements are not covered by workers’ comp.

Q: Wages for a replacement worker

While creating safety programs can help reduce workers’ comp premiums, the costs of safety enhancements are not covered by workers’ comp.

Q: Client or vendor accidents

If someone other than an employee is injured in the course of your normal work, they are not covered by workers’ compensation. However, they may be covered by general liability insurance, which we recommend for small business owners.

Q: Work safety improvements

While creating safety programs can help reduce workers’ comp premiums, the costs of safety enhancements are not covered by workers’ comp.

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Do Sole Proprietors Need Workers’ Compensation Insurance?

Workers’ compensation insurance protects your business and helps take care of employees who get sick or injured on the job. Nearly every state requires workers’ compensation insurance when a business has employees.

However, in many states, a business owner is not considered an employee and is not required to be covered by workers’ comp insurance. This is often why business owners do not include themselves in their own workers’ comp coverage.

Just because it’s not required doesn’t mean it’s not needed.

If you’re a sole proprietor, you’re the motor that makes your business run. If an accident or an injury on the job puts you out of action, there’s a good chance that your business, and all that it provides, could come to a screeching halt.

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What is Typically Covered by Sole Proprietors Workers’ Compensation?

Medical expenses

Lost wages

Rehabilitation costs

Funerals and survivor benefits

What is Typically Not Covered by Workers’ Compensation?

Client or vendor accidents

Work safety improvements

Wages for a replacement worker

What is Typically Not Covered by Sole Proprietors Workers’ Compensation?

Client or vendor accidents

Work safety improvements

Rehabilitation costs

Some Uncommon Workers’ Compensation Injuries

Workers’ compensation can cover a wide range of situations where you get hurt or become sick, such slips and falls, machinery accidents, and exposure to harmful substances. However, workers’ comp can often cover some incidents you may not be aware of.

An allergic reaction from food delivered to you at work
Breaking your ankle on a jobsite site
Injuring your back reaching for a pencil that rolled under a desk
Sustaining bites from a client’s’s dog while working at their home

The High Cost of Not Having Workers’ Compensation

Work-related accidents can happen, and when they do, it can be costly if you don’t have workers’ compensation coverage. Here are a few examples of the most frequent types of employee injuries and their average claims.¹

Vehicle accidents during work

$90,914

Neck injuries

$68,021

Burns

$63,119

Slips, trips, and falls

$51,047

Lower back injuries

$40,409

¹Data taken from the National Council on Compensation Insurance’s (NCCI) Workers’ Compensation Statistical Plan database.

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What if I Already Have Health Insurance?

A standard health insurance plan may not cover a work-related injury or illness or injury. Plus, many health insurance plans won’t cover lost income as a result of your injury or rehabilitation and retraining costs.

Major Injuries and Accidents Can Come with an Added Cost to Your Business.

If an employee getsis hurt and has to miss work, it’s possible to find a temporary replacement or have others pick up some of the slack. However, if your business has justonly you, an injury can be a one-two punch. Not only will you need to cover your medical costs, you also could also be loseing income and missing out on generating new business.

How Much Does  Workers’ Comp Cost?

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What Some Customers are Paying for Workers’ Comp²

North Carolina

Carpenter

Payroll: $40,000
<1 year as a sole proprietor
Quotes provided 8/15/2024

$109/month

Alabama

Housekeeper

Payroll: $30,000
1+ year in businesses an LLC
Quotes provided 10/22/2024

$78/month

South Carolina

Sales Representative

Payroll: $30,000
1 year in business as a sole proprietor
Quotes provided 4/4/2025

$51/month

²These examples are real insurance quotes generated on the dates above. They are for illustration purposes only. Your coverage options and pricing may differ based on the information you provide us about your particular business, the state you operate in, the number of employees, and other factors.

Which Sole Proprietor Businesses Can be Covered by Workers’ Comp Insurance?

Generally speaking, workers’ compensation coverage can be purchased for many types of businesses, even if they’re run by a sole proprietor. We have deep expertise in small business insurance and can help find sole proprietor insurance for 350+ types of small businesses, including these:

Building & Construction

Health, Beauty & Wellness

Restaurants & Food Service

Cleaners

Handyman services

Brick & Mortar Retail

Ecommerce businesses

Professional Services

Other types of businesses

What is a Workers’ Compensation Ghost Policy?

A ghost policy is a type of sole proprietor workers’ comp. It’s called a ghost policy because no employees exist, and the policy covers no one.

A ghost policy is intended only for single-person businesses with no employees. It does not provide coverage to the business owner, and it should never replace your state’s requirements for workers’ comp insurance.

Many small business owners may want to, or need to, obtain sole proprietor workers’ comp to bid on certain contracts or meet specific insurance requirements, but they don’t want to pay a high premium for workers’ comp insurance.

Since premiums for workers’ compensation policies are often based on employee payroll, a ghost policy is often less expensive than traditional workers’ compensation coverage.

Are Ghost Policies Legal?

Laws vary by state with some prohibiting them and others allowing them under certain circumstances. In states where they are allowed, ghost policies can be used by sole proprietors, independent contractors, and businesses that need to comply with insurance requirements without having employees.

Workers’ Compensation

A One-minute Explanation

Find out what workers’ comp covers, why you might need it, and how we can help — all in just 60 seconds.

Video transcript

As a business owner, you’re the one making it all happen. But as your business grows, you’re likely to have to bring on some people to help get the job done. And in most states once you have employees, you may need workers’ compensation insurance. Workers’ comp can help cover if an employee gets sick or injured while working for your business, that can include medical rehab, bills loss, wages, and even death benefits. Carrying a workers’ comp insurance policy can prevent an injured employee from suing your business. Workers’ comp laws differ by state, which can make it difficult to figure out what coverage you need. Not to worry, if you need coverage, our high-tech online quote tool is designed to help you get what you need for the state or states you work in. Plus we’ve got helpful licensed agents you can speak to on the phone. Workers’ comp can help take care of your employees and we can help you take care of workers’ comp.

Answers to More Workers’ Comp Questions

What determines the cost of sole proprietor workers’ comp insurance?

What are the workers’ comp requirements in my state?

Typically, owners are not legally required to be covered by workers’ compensation insurance, but laws and regulations vary from state to state. Not having the proper coverage can come with steep fines and other penalties, so it’s best to check with your state agencies for specific information. We have guides to get you started in these states:
Workers’ Compensation Insurance CA

Workers’ Compensation FL

Workers’ Compensation Insurance MN

Workers’ Compensation Insurance NJ

Workers’ Compensation Insurance NY

Workers’ Compensation Insurance PA

Workers’ Compensation Insurance WI

Workers’ Compensation Insurance NC

We have more workers’ comp FAQs here.