Hiring an Independent Contractor: What Insurance Should You Check?
Learning goal: Know why an uninsured contractor can become your workers comp problem, and what proof of insurance to ask for before work starts.
Short answer
Ask for proof of their insurance before work starts. Triple-I says most states will treat an uninsured contractor or subcontractor as your employee for workers comp purposes, so you may be liable if they're hurt working for you. Ask for proof of workers comp and liability coverage, and check the dates and limits.
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On this page
The Fuller Picture
Calling someone a contractor doesn't settle the insurance question. If they get hurt and have no workers comp of their own, your business may end up responsible. Larger companies handle this by requiring proof of insurance from contractors, and small businesses can do the same.
Key Takeaways
- Triple-I: "Under some laws, independent contractors are not considered to be your employees."
- "However, for the purpose of workers comp insurance, most states will treat an uninsured contractor or subcontractor or employees of an uninsured subcontractor as your employee."
- That means "you may be liable if he or she is injured while working for you," per Triple-I.
- "Larger companies often require any contractors or subcontractors doing work for them to provide proof they have workers comp insurance."
- Rules on who counts as an employee vary by state, so check yours.
Real-World Example
A contractor without coverage
Ravi's print shop hires a contractor to install shelving. The contractor brings a helper and has no workers comp policy. The helper falls from a ladder and breaks a wrist. Because the contractor was uninsured, the state may treat the helper as Ravi's employee for workers comp purposes. Had Ravi asked for proof of the contractor's workers comp before work started, the injury would generally have gone to the contractor's insurer.
Common Mistakes
- Assuming a contractor label means you carry no risk if they're hurt.
- Accepting a verbal "I'm insured" without written proof.
- Not checking that the proof covers the dates of the job.
Interactive Exercise
Before a contractor starts
Collect these before the first day of work.
Tick each step as you do it. Your checklist is saved in this browser.
Knowledge Check
Question: An uninsured contractor's worker is hurt on your job. What does Triple-I say most states may do for workers comp purposes?
Recommended Insurpedia Tools
- Insurance Preparedness Checklist: Twelve insurance questions worth having an answer to, with a place to learn more about each one you have not looked at yet. No score.
Related Insurance Terms
Related Scenarios
Questions to explore next
Questions readers often ask next about this topic:
- What should a certificate of insurance show?
- Do I need workers comp if I only use contractors?
- How do I check a contractor's policy is active?
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The factual claims on this page were checked against these sources. Rules and figures change, so check the source itself if you need to confirm the current version.
- Insuring your business: workers compensation insuranceInsurance Information Institute (Triple-I)
Educational information, not advice: This lesson is for general education only, not legal, financial, or insurance advice. Actual coverage, discounts, and requirements depend on your policy’s wording, your insurer, and the laws of your state. Confirm specifics with your own insurer or a licensed agent before making a decision. Insurpedia does not sell insurance and does not recommend specific insurers. The workers comp points come from Triple-I. State rules on employee status vary.