Worker's Compensation Insurance

11 Who Is Required to PurchaseWorkers’ Compensation Insurance? All California employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700. If a business employs one or more employees, it must satisfy the requirement of the law. Sometimes a business owner (sole-proprietor) may desire to purchase workers’ compensation insurance to cover himself/ herself only. The inclusion of a sole-proprietor must be clearly stated in the workers’ compensation policy or must be added as a coverage endorsement to the policy. Since workers’ compensation insurance is a type of liability insurance where the employer assumes complete liability for all work-related injuries, a workers’ compensation policy for a sole-proprietor may not be the best choice. Purchasing health, life, and/or disability income insurance can be viable alternatives to workers’ compensation for a sole- proprietor. Contact a licensed commercial broker-agent or a casualty broker-agent for further information and consultation. Executive officers and directors of quasi-public or private corporations must be included in workers’ compensation coverage while rendering actual service for the corporation for pay, unless the officers or directors elect to be excluded from coverage. An officer or director who individually owns at least 15 percent of the corporation’s issued and outstanding stock may elect to be excluded from workers’ compensation coverage by executing a written waiver. Similarly, a general partner of a partnership or a managing member of a limited liability company receiving wages irrespective of profits may elect to be excluded from workers’ compensation benefits by executing a written waiver.