Do owner-operators need occupational accident insurance or workers' compensation?

How do occupational accident and workers' compensation compare?

Occupational accident protects you, not other people. It is separate from liability coverage, which pays for harm to others, such as primary auto liability. For the product pages, see occupational accident and workers' compensation.

What does occupational accident cover, and what does it leave out?

If you are an owner-operator or independent contractor, you usually do not have an employer's workers' compensation behind you. If you are hurt, medical bills come out of your pocket and your income stops. Occupational accident is a policy that generally pays benefits for covered injuries, up to the limits and benefit periods in the policy.

Common benefit types, depending on the policy:

• Medical expense benefits for covered injuries.
• Disability income benefits while you cannot work, usually after a waiting period.
• Accidental death and dismemberment benefits.
• Sometimes other items, such as a survivor or funeral benefit.

Policies vary a lot. Read the declarations, definitions, and exclusions. In general, these policies are narrower than people assume:

• Illness and long-term conditions are often outside an accident policy.
• Pre-existing conditions are excluded under many policies.
• What counts as "work" is defined by the policy. Off-duty time may not count.
• Injuries from certain acts, such as intoxication or illegal acts, are commonly excluded.
• Your liability to others, damage to your truck, and the freight are separate coverages. See bobtail and non-trucking liability, physical damage, and motor truck cargo.

The waiting period, the benefit period, and the maximums are what separate one policy from another. We do not publish prices. Cost is set by insurers and the licensed agents you work with.

The tool below asks five short questions about your operation, including whose authority you run under, and shows which coverages usually come up. It shows no prices.

What is workers' compensation, and who runs it?

Workers' compensation is state-level. The U.S. Department of Labor's page on the subject sends people hurt on the job while working for private companies or state and local government to their state workers' compensation board, and the Labor Department's Office of Workers' Compensation Programs lists the official for each state and territory. The federal programs that office runs cover federal workers and certain other groups, not private employers in general.

That has a practical meaning: we cannot tell you what your state requires. Who must be covered, what benefits are owed, and how the system is run differ from state to state. We are not stating any state's rule here because we have not read each state's law for this article. Use the Labor Department's directory to find your state's agency and ask it directly.

Who counts as an employee, and why does that matter?

The label on a contract does not settle it. Three sources show why:

• The IRS looks at the facts and circumstances, weighing behavioral control (does the company control what the worker does and how), financial control (are the business aspects of the job controlled by the payer), and the type of relationship, such as written contracts and whether the work is a key part of the business. The IRS notes no single factor decides it.
• The federal safety rules define "employee" to include "a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle)" (49 CFR 390.5). That definition is for the safety regulations, not for workers' compensation, but it shows that a driver who runs on someone else's authority is treated as part of the operation for safety purposes.
• Your state has its own tests for workers' compensation, and they are not the IRS's tests.

If you are a carrier or a small fleet that uses owner-operators, do not assume that asking each one to carry occupational accident coverage settles your workers' compensation question. Whether a driver is an employee for your state's workers' compensation purposes is a question for the state agency or an attorney. And if you are a driver, your status under the law does not depend on what your paperwork calls you.

I am leased onto a carrier. What does my lease say?

Federal leasing rules say the lease must clearly specify the carrier's legal obligation to maintain insurance for the protection of the public, and must specify "who is responsible for providing any other insurance coverage for the operation of the leased equipment, such as bobtail insurance." If the carrier charges you back for any of that insurance, the lease must state the amount (49 CFR 376.12(j)(1)). If you purchase coverage through the carrier, the lease must say the carrier will give you copies of the policies and a certificate for each one (376.12(j)(2)).

That text is about insurance for operating the leased equipment. It does not, by itself, say whether the carrier requires you to carry occupational accident coverage or whether it covers injuries to you. Some carriers ask leased owner-operators to carry it. Read the insurance section and any addenda, and ask the carrier in writing what it requires, who the policy is with, and what is charged back.

For a related lease question, see bobtail vs non-trucking liability.

Which one do I need?

No one article can answer that for you, but these questions point to who can:

1. Do I have employees? Drivers, mechanics, or office staff on your payroll fall under your state's workers' compensation rules. Ask your state agency when coverage is required and how it is arranged. A workers' compensation policy is how employers usually provide it.
2. Am I a sole owner-operator with no employees? Whether a sole owner is covered, can opt in, or is left out is a question for your state's rules. Ask your state agency. If you are not covered by workers' compensation, occupational accident is one way owner-operators arrange injury benefits for themselves.
3. Does my lease or contract require something? Carriers, brokers, and shippers can put coverage requirements in the contract.
4. What would happen to me if I could not work for three months? The benefit period and waiting period of any policy answer that more than its name does.
5. Does the policy I am looking at say it replaces workers' compensation? Be careful. A private policy does not change what state law requires of an employer.

Bring these answers to a licensed agent. BreadRoute is not a licensed insurance agency and does not sell insurance. A request goes to licensed insurance partners, who handle any coverage options.