Independent Contractor Exclusion — Insurance Claims Definition
Workers Comp
Workers compensation typically does not cover true independent contractors; misclassification creates coverage and penalty exposure.
States use different tests (economic realities, ABC test) to distinguish employees from contractors. Misclassified workers denied WC may sue; employers face fines and back premiums.
Examples
A gig driver classified as contractor suffers injury; state finds employee relationship — employer owes WC benefits retroactively.
Common Mistakes
Using a 1099 label alone to avoid WC. Failing to verify subcontractor certificates of insurance.
