Workers Comp Insurance for Self-Employed and Sole Proprietors in South Carolina
No, self-employed workers and sole proprietors in South Carolina are not legally required to carry workers compensation insurance on themselves. But that does not mean you should skip it. Contracts with general contractors, client requirements, and gaps in your health insurance may make voluntary coverage the smart move.
Do Self-Employed Workers Need Workers Comp in South Carolina?
No. South Carolina exempts sole proprietors, partners, and LLC members from mandatory workers comp coverage. The state only requires it when a business has four or more employees with annual payroll above $3,000. See our workers comp guide for SC small businesses for the full requirements.
If you work alone, the state will not fine you or shut you down. But that exemption only applies to state law. It does not protect you from:
- Contract requirements from general contractors
- Client demands for a certificate of insurance
- The financial fallout of a serious on-the-job injury
Part-time workers and family members count toward the four-employee threshold. Hire your spouse and two part-time helpers, and workers comp becomes mandatory for the business.
When a Sole Proprietor Should Carry Workers Comp Anyway
| Situation | Why It Matters |
|---|---|
| GCs require a COI | Most Greenville GCs will not let you on a job site without a workers comp certificate. No COI, no contract. Under the statutory employer doctrine, if you get hurt without coverage, the GC’s policy pays and their premiums go up. |
| Health insurance excludes work injuries | Many health plans have exclusion language for injuries on the job. If denied, you pay out of pocket for surgery, rehab, and lost income. |
| No income protection | Break your leg on a job and cannot work for 3 months? Workers comp replaces 2/3 of your wages. Without it, you get nothing. |
| Licensing or permits require it | Some SC trade licenses and municipal permits ask for proof of workers comp coverage. Plumbing and electrical contractors in Greenville County have run into this. |
How to Opt Into Workers Comp Coverage in SC
South Carolina allows sole proprietors, partners, and LLC members to voluntarily elect coverage. The process:
- Contact an insurance agent
- Tell them you want to include yourself as a covered employee
- The carrier adds you to the policy
- You now have the same rights and benefits as any other covered worker
You file claims through the SC Workers’ Compensation Commission and receive the same medical and wage benefits. To opt out later, file Form 38 with the Commission.
What Happens If You Get Injured Without Workers Comp
Without Workers Comp
- Health insurance may deny the claim
- Zero wage replacement from day one
- Disability insurance has 30-90 day waiting period
- Tens of thousands in medical bills out of pocket
- Could put the business under
With Workers Comp
- Medical bills covered in full
- 2/3 wage replacement kicks in immediately
- No-fault system, pays regardless of who caused it
- Disability benefits for partial/total disability
- Business stays running
A Greenville landscaper who falls off a ladder and tears a rotator cuff is looking at surgery, physical therapy, and two to four months without income. Workers comp covers all of it. Without it, that injury could end the business.
General Contractors and the COI Requirement
If you work as a subcontractor in the Greenville construction market, this is the most important section on this page. We cover this in more detail in our workers comp guide for contractors.
South Carolina’s statutory employer doctrine: if an uninsured sub gets hurt on a job, the GC is liable for the workers comp claim. The GC’s premiums go up for three years. This is why every GC requires a certificate of insurance before you step on the job site.
Bottom line:
It does not matter that the law says sole proprietors are exempt. The GC’s contract overrides the exemption. For self-employed contractors working on projects in Verdae, downtown Greenville, or along the I-85 corridor, voluntary workers comp is a cost of doing business.
Alternatives to Workers Comp for Self-Employed in SC
These options exist, but none are a direct substitute for workers comp.
| Alternative | What It Covers | Satisfies GC COI? |
|---|---|---|
| Occupational Accident Insurance (OAI) | Medical bills + lost income from work injuries. $60-$160/month. Not regulated by SC WCC. | No |
| Personal Disability Insurance | Income replacement. 30-90 day waiting period. Does not cover medical bills. | No |
| Health Insurance | Medical costs, but many plans exclude work-related injuries. | No |
| General Liability | Third-party injuries (customer trips at your site). Does NOT cover your own injuries. | No (different COI) |
If a GC requires a workers comp COI, most will only accept an actual workers comp policy. Learn exactly what workers comp covers in our complete guide.
How Much Does Workers Comp Cost for Sole Proprietors in SC?
Cost depends on your trade. Workers comp premiums are based on your NCCI class code rate, payroll, and experience modification rate. For a full breakdown, see our guide on workers comp costs in South Carolina.
Office Consulting
~$45/year
SC Average (all industries)
~$76/mo
Residential Construction
$4,000+/year
SC allows carriers to apply schedule credits and debits of up to 25% on filed rates. An independent insurance agent can run quotes from multiple carriers to find the best rate for your specific trade.
The Independent Contractor vs. Employee Question
If you hire people, the SC Workers’ Compensation Commission has made it clear: paying someone on a 1099 does not automatically make them an independent contractor.
The Commission uses the right-of-control test. If you control when, where, and how someone does their work, they are an employee regardless of how you pay them. Misclassifying employees as independent contractors leads to:
- Fines from the WCC
- Back premiums owed
- Personal liability for any claims
A business insurance review with an independent agent can help you figure out whether your workers are properly classified.
How an Independent Insurance Agent Helps
A captive agent gives you one option from one carrier. An independent agent like The Morgano Agency represents multiple carriers and shops the market on your behalf.
Carriers price the same risk differently. One may be aggressive on construction class codes while another specializes in office-based businesses. Beyond the quote, an independent agent helps with the gray areas:
- Do you need to opt in?
- Will your GC accept your current COI?
- Are your workers classified correctly?
- Should you bundle workers comp with general liability and commercial auto?
Frequently Asked Questions
Talk to a Greenville Agent About Workers Comp
The Morgano Agency helps self-employed workers and sole proprietors find the right coverage at the best price.
The Morgano Agency Inc
206B Pine Knoll Dr, Greenville, SC 29609
Phone: (864) 609-5285 | Fax: (864) 609-5689
Email: vic@morganoagency.com
Monday – Friday, 9:00 AM – 5:00 PM
