Does a Sole Proprietor Need Workers’ Comp Insurance in New Jersey?
Rules surrounding Workers’ Compensation insurance can vary based on business formation. Regarding sole proprietorships, compliance is based on the number of workers in addition to the sole proprietor.
Sole proprietors in New Jersey only need to get Workers’ Compensation if they employ workers in addition to themselves. In other instances, sole proprietors in New Jersey do not need to have Workers’ Compensation. That said, they can choose to get it by submitting a notice of election of coverage to the Compensation Rating and Inspection Bureau. When sole proprietors have Workers’ Compensation, they cannot be sued for injury or penalized for failing to comply with insurance requirements in New Jersey.
For more insight into how our New Jersey Workers’ Compensation insurance brokers can help your sole proprietorship, call NPN Brokers today at (866) 340-9120.
When Do Sole Proprietors in New Jersey Need Workers’ Comp Insurance?
New Jersey excludes some types of businesses from needing Workers’ Compensation, as well as some types of employers. Sole proprietors and sole proprietorships are sometimes exempt, but only in certain situations.
In New Jersey, sole proprietors only need to get Workers’ Compensation policies if they have other employees in addition to themselves. This means most sole proprietorships operating with additional employees must purchase a policy. To find coverage for your workers, speak with our New Jersey Workers’ Compensation insurance brokers and start the process of getting a quote for your company.
If you need insurance for your sole proprietorship and fail to get it, you risk incurring expensive financial penalties. Because there is not a legal separation between the principal owner of a sole proprietorship and the company itself, a sole proprietor may be personally responsible for paying any fines incurred by their company for non-compliance. Sole proprietors without insurance may also need to pay out of pocket for a worker’s damages if sued in New Jersey.
When Do Sole Proprietors Not Need Workers’ Comp Insurance in New Jersey?
While Workers’ Compensation is necessary for many sole proprietorships throughout the state, not all are required to maintain a Workers’ Compensation policy at all times in New Jersey.
When sole proprietors work alone, they do not need to get Workers’ Compensation in New Jersey. So, if you own your company and do not employ any other workers, you will not need to purchase a policy to protect yourself should you be injured at work. That said, you can still get coverage if you choose.
How Can Sole Proprietor in New Jersey Opt to Get Workers’ Comp Insurance?
Although sole proprietors with no additional employees do not need to get Workers’ Compensation in New Jersey, many still choose to get coverage so that they are protected in case of a workplace accident.
To opt into the Workers’ Compensation system in New Jersey, sole proprietors must submit a notice of election to the Compensation Rating and Inspection Bureau. This form requires sole proprietors to provide information about their business and themselves. Sole proprietors may also use this same form to change their minds about a prior election into Workers’ Compensation coverage.
If you need to update your Workers’ Compensation policy to account for additional employees, especially if your policy previously only covered you as the sole proprietor, speak to our brokers. In such instances, it may be best for sole proprietorships to get pay-as-you-go Workers’ Compensation policies, especially if their workforce is likely to change periodically.
How Much Does Workers’ Comp Insurance Cost for Sole Proprietors in New Jersey?
Depending on the size of a sole proprietorship in New Jersey, Workers’ Compensation might be more or less expensive.
Generally speaking, Workers’ Compensation for sole proprietors is relatively affordable. This is especially true if a sole proprietor is the only person employed by their company. That is because workplace liability insurance costs typically increase as a company’s workforce and payroll do. Furthermore, the fewer workers a company employs, the lower its chances of experiencing a workplace accident are. Premiums can also increase for sole proprietorships in more hazardous industries.
Although Workers’ Compensation can appear like an unnecessary cost, especially if you are not mandated to get Workers’ Compensation for your sole proprietorship, our brokers can help you keep expenses low so your company can remain covered without breaking the bank in New Jersey.
Should All Sole Proprietors in New Jersey Have Workers’ Comp Insurance?
Although Workers’ Compensation is important for virtually all companies in New Jersey, the protection it affords is even more valuable to sole proprietorships and sole proprietors.
If you are a sole proprietor, you understand that you and your company are legally bound. This means that the debts your company has are your debts and any legal action against your company is also your problem. So, if you or a worker are injured while at work, it is your responsibility to cover the expenses because it is your company’s responsibility. This is what makes Workers’ Compensation so beneficial to sole proprietors in New Jersey.
When you have Workers’ Compensation, neither you nor your company can be sued for damages by an injured worker. Instead, they have to file a Workers’ Compensation claim. Your insurer will then investigate the accident and make a decision about the claim’s validity and benefits. Workers’ Compensation protects sole proprietors from litigation in New Jersey and provides them a path to recovery should they be injured while performing work for their company.
If you do not have Workers’ Compensation, you will not be protected should a workplace accident occur. You might also risk being given penalties and, in some cases, jail time for non-compliance with Workers’ Compensation coverage mandates in New Jersey.
Get Workers’ Comp Insurance for Sole Proprietors in New Jersey
Call (866) 340-9120 today to speak with NPN Brokers and get a quote from our New Jersey Workers’ Compensation insurance brokers.
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