Contractor Insurance You Can Trust

Does Workers Comp Cover Independent Contractors I Hire?

The short answer is no — but if a 1099 worker you hired gets injured, you may still be on the hook depending on your state’s rules.

• ✓1099 workers are not your employees and are generally not covered
• ✓Uninsured subs can be charged against your payroll at audit
• ✓Many states allow injured subs to reclassify themselves as employees
• ✓Always collect COIs from every sub before work starts

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The Workers Comp Rule for 1099 Subs

Workers compensation is an employer-employee benefit. Independent contractors are not employees, so they are not covered under your workers comp policy by default. If a 1099 sub is injured working on your project, your policy does not pay their medical bills or wage replacement — at least not automatically.

The problem arises when that sub has no workers comp of their own. An uninsured sub has nowhere to turn for benefits — except toward you. In many states, an injured worker can request a determination that they were actually an employee regardless of how they were paid.

Your audit exposure is immediate. Standard workers comp policies include an uninsured subcontractor clause that treats labor payments to uninsured subs as your payroll. If you paid $50,000 to a sub who can’t provide a certificate, your carrier can charge you workers comp premium on that $50,000 at audit.

How to Protect Yourself from Sub Liability

The single most effective protection is collecting certificates of insurance from every sub before work starts. The certificate must show active workers comp coverage with dates that include the work period. File it and track expiration dates.

Include a clause in your subcontractor agreements requiring the sub to maintain workers comp throughout the project and to hold you harmless for any claims arising from their workers. This gives you a contractual claim for reimbursement if you’re ever charged.

For subs you use repeatedly, set up an annual certificate request cycle so renewals come in automatically. A sub whose coverage lapses mid-project creates the same exposure as an uninsured sub — and your auditor won’t distinguish between the two.

You Might Also Find Helpful

• Subcontractor Workers Comp Requirements
• Workers Comp Audits — What to Expect
• Can a 1099 Sub File a Workers Comp Claim Against Me?
• Does Workers Comp Cover Subcontractors?

Make Sure Your Sub Situation Isn’t a Hidden Liability

We review how your policy handles subcontractor exposure and help you set up certificate tracking that protects your audit and your liability.