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Workers Comp: 6 Risks Subcontractors Take On When Not Insured

Working as a subcontractor comes with many perks, like having the freedom to choose your own projects and set your own schedule. However, it also comes with some big risks if you don’t have proper insurance coverage in place, especially workers’ compensation insurance. Without workers’ comp, you’re putting your business and personal finances in jeopardy anytime you’re on a job site.  

Don’t Risk Going Without Subcontractor Workers Comp

Some subcontractors mistakenly think they can skip out on workers’ comp insurance. But doing so exposes you to major risks, like the following:

1. Inability to Get Hired

Many general contractors require subcontractors to carry workers’ comp policies before bringing them on. A wise subcontractor understands the necessity of workers’ comp insurance as their ticket to gain profitable projects and build a reputation in their industry. Without being able to show proof of workers’ comp coverage, you’ll miss out on job opportunities.

2. Fines and Stop Work Orders  

States can levy hefty fines against subcontractors found working without valid workers’ compensation policies. Fines can range from $1,000 per day of work without coverage up to $10,000 or more depending on the state. 

Complying with a stop work order issued until you secure subcontractor workers comp is the only way to avoid further penalties. You may also face stop work orders preventing you from starting new projects until coverage is secured.

3. Lawsuits and Liability

If you or one of your crew members is injured on a job site, you’re opening yourself up to expensive injury claims and lawsuits without workers’ comp in place. Legal defense alone could cost tens of thousands, before accounting for any damages awarded. Subcontractor workers comp shields you from this risk. You’ll be on the hook for all legal fees, medical bills, lost wages, and other costs.

4. Out-of-Pocket Medical Expenses

A major workplace injury can rack up huge medical bills fast. For a serious injury requiring extended treatment or surgery, medical costs without subcontractor workers comp coverage could easily surpass six figures. Without workers’ comp, you’ll have to pay for expenses like hospital visits, medications, physical therapy, and more entirely out of pocket.

5. Loss of Income 

Being out of work due to an injury while uninsured means you must go without income until you recover and can take on work again. Even a few weeks off work could devastate your company’s cash flow if you’re uninsured. Subcontractor workers comp provides lost wage replacement during recovery. Minor injuries too can keep you off a job site for weeks, leading to financial strain.

6. Permanent Damage to Your Business

Between legal fees, medical bills, lawsuits, and fines, just one on-the-job injury without workers’ comp can permanently financially sink your subcontracting business before it even gets off the ground. The risk isn’t worth it. Protect your livelihood with subcontractor workers comp coverage.

Protect Your Livelihood with Subcontractor Workers Comp

As a subcontractor, workers’ comp insurance is an absolute must-have. It protects your business assets and personal finances from the monumental risks that come with working job sites while self-employed. Don’t let an avoidable injury or incident bankrupt your business. Get covered with subcontractor workers comp today.


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