Independent Contractors and Workers' Compensation

When it comes to employee benefits, the classification of employees based on their titles plays a major role. The subject has become even more complex recently with remote working being an integral part of a work environment.Independent contractors and workers’ compensation in most cases do not go hand in hand. Simply put, independent contractors are not eligible to receive workers’

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Classification between Independent Contractors and Employees

To understand who is eligible to receive workers’ compensation and who is not, let us first understand the basic classification of workers. Typically, there are two types of workers who exist in an organization - full-time employees and independent contract-based employees like freelancers, consultants, etc. The difference between these two types goes beyond the mere title these employees hold.

Full-time employees of an organization are eligible for numerous benefits such as health benefits, pensions, leaves, etc. Along with the multiple benefits offered by the employer to its full-time employee, they are also eligible for workers’ compensation in case of an injury at the workplace. These benefits are usually not offered to contractual workers.

When it comes to independent contractors and workman compensation policy, they are not eligible for the same. As mentioned above, independent contractors are not eligible to receive benefits from employers until specified by the employer himself. Workers’ compensation is a part of an employee benefits program that refrains contractual workers to be a part of the same.

Workers Compensation Insurance

With the Workmen’s Compensation Act 1923, becoming a statutory obligation of the employer, Workers' Compensation Insurance came into being. This type of commercial insurance policy is also sometimes referred to as a workmen compensation policy or employee compensation policy.

This policy ensures that the frontline workers are adequately compensated for injuries caused on duty. Employees who are injured or disabled on the job are entitled to receive workers’ compensation. In case of the demise of the worker, the dependents are eligible to receive compensation. The compensation amount depends on various factors.

Workman’s comp insurance policy compensates employees if they are injured at the workplace. It also helps employers to cover legal costs if the employee presses any charges against the employer.

Independent Contractors & Workers’ Compensation Insurance

In the above content, we have understood who are considered independent contractors, their standing in workers’ compensation, and the meaning of workers’ compensation insurance. It's time to put all these pieces together and know if contractual workers can be covered under workers’ compensation insurance.

Most of the policies do not cover independent contractors under workers compensation insurance unless these workers are separately covered or any declaration is made. However, if an independent contractor is injured or disabled on the job, he has the right to press charges against the employer and take him to the court. If it is proved that the injury sustained is due to the carelessness or negligence of the employer, the employer will have to pay for the damages.


Insurance is a risk mitigation tool. In the case of workers comp, insurance acts as financial support for the employer. Since independent contractors are not covered under this insurance type, it is always a favourable decision to take up personal insurance policies to cover oneself from unprecedented losses. Also, if you are an independent contractor who employs other workers, buying a workmen's compensation policy for them should be considered as well.


Written By: PolicyBazaar - Updated: 11 August 2023

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