Workers’ Comp for Sole Proprietors in California
If you run your business under your own name and nobody else works for you, California leaves workers’ comp up to you. That choice ends with your first hire. This guide explains workers comp insurance for a sole proprietor before and after that point, and what replaces your income if you are the one who gets hurt.
A business of one: coverage is your call
The DWC’s employer FAQ is clear that an owner with no employees is not required to cover himself or herself. It also points out that health, life or disability insurance may serve a business of one instead. A freelance designer, a solo bookkeeper or a one-person photography studio can legally operate without a policy.
Optional is not the same as unimportant. Without coverage, an injury on a job leaves you to pay for treatment through your health plan and to absorb the lost work yourself, and a client may refuse to sign until it sees a certificate. The rest of this guide is about weighing those gaps.
Your first helper, even part time
Labor Code section 3700 applies the requirement to every employer with one or more employees, and section 3351 defines an employee as every person in the service of an employer. Nothing in that definition turns on hours worked, so a weekend helper counts. Picture a one-person cleaning business that brings on someone for Saturday jobs: the policy has to be in force before that first shift, not after the first month.
Two common assumptions need checking. Paying the helper on a 1099 does not settle anything, because California’s ABC test decides status; our page on workers’ comp for independent contractors covers that from the hiring side. And the family exclusions in Labor Code 3352, such as a household worker employed by a parent, spouse or child, apply to work in a residence, not to work in your business. Tell us about any relative you pay. Our first-employee insurance steps list the rest.
Sole proprietor workers compensation insurance that covers you
When an owner does elect coverage, the DWC says the owner’s inclusion must be clearly stated in the policy or added by endorsement. Labor Code section 4151 lets an employer elect into the compensation system by buying insurance. Not every carrier writes it: State Fund’s broker guidance says individual owners of a sole proprietorship are not covered in its policy contract. Some insurers offer owner-only coverage, a form of self-employed workers comp, and NEXT Insurance describes sole proprietors choosing it to protect income, meet client and licensing demands and get ready to hire.
What a covered worker receives shows why owners consider it. The DWC’s 2026 benefit table puts temporary disability at two-thirds of average weekly earnings, with a minimum of $264.61 a week and the two-thirds rate applying up to $2,646.17 of weekly earnings. Permanent disability runs $160 to $290 a week for ratings from 1% to 99%, and there is a $6,000 supplemental job displacement voucher. We request owner-only quotes from insurers that write them, and the insurer decides after reviewing your trade.
If you skip it: what replaces your income
Health insurance pays doctors, not your missed invoices. For self-employed Californians who do not pay into State Disability Insurance, the EDD offers Disability Insurance Elective Coverage. It pays whether you are hurt on or off the job, unless you carry workers’ comp for yourself. You need at least $4,600 a year in net profit, and you commit for two full calendar years.
If you do carry owner coverage and your health plan pays first for what turns out to be a work injury, Labor Code section 4903.1 lets the plan file a lien in the workers’ comp case and be reimbursed from the award. Think of these as layers: health insurance for care, and either owner coverage or elective disability coverage for income.
When a client or general contractor asks for a certificate
NEXT gives familiar examples: a gym asking a fitness instructor for a workers’ comp certificate, or a property manager asking a cleaner. A sole proprietor without owner coverage may have nothing to send. Ask the client whether a certificate showing no employees, or a general liability certificate alone, will satisfy the contract before you buy anything. Our certificate of insurance guide explains what clients read on the form.
Licensed contractors face a firmer rule. A sole-proprietor roofer with a C-39 license cannot use the CSLB’s no-employee exemption, and NEXT notes that renewing a California contractor’s license takes proof of coverage or a valid exemption. Under current law every licensee needs coverage by January 1, 2028. CSLB’s March 2026 report proposes a post-2028 exemption limited to individual owners with no RME, a business plan and an attestation; that is a proposal only.
What does workers comp insurance cost a sole proprietor?
Owner-only policies have no published price list, so the closest guide is small-business premium data: published industry figures, not a Mithril1 quote. Insureon reports that its small-business customers, most with fewer than five employees, pay about $54 a month for workers’ comp, or $643 a year, and $63 a month in California. Its annual range runs from about $300 to over $5,000, and 47% of its customers pay under $50 a month.
NEXT says an owner’s premium reflects state, job class, payroll and claims history, and that the payroll figure may be a minimum or assumed amount. At Insureon’s California figure, $63 a month works out to $756 a year. A policy that adds a helper’s wages grows from there, because that payroll is rated too.
Expect a higher price in physical trades such as roofing or tree work, with past claims, or once employees join. Expect a lower one for desk-based work like bookkeeping or design and a clean history.
Moving to a partnership, LLC or corporation
Changing the entity changes the rules. Working partners who receive wages irrespective of profits count as employees under Labor Code 3351(f), and a general partner may opt out with a written waiver under 3352(a)(17); State Fund rates covered partners at executive minimum and maximum payroll. In an LLC, a managing member can waive the same way, as our page on insurance for LLCs explains.
In a corporation, an officer or director who owns at least 10% of the stock may waive coverage, or 1% when a parent, grandparent, sibling, spouse or child owns 10% and the officer has health coverage. The threshold was 15% when AB 2883 took effect in 2017, and the current statute says 10%. A sole shareholder of a private corporation is excluded automatically unless coverage is elected. Tell us before you file, so the workers’ comp policy matches the new entity from its first day.
A few useful answers
Common questions
Is workers comp insurance required for a sole proprietor with no employees?
No. The DWC says an owner with no employees does not have to cover himself or herself. CSLB licensees in roofing, concrete, HVAC, asbestos abatement and tree service are the exception, and every licensee needs coverage by January 1, 2028 under current law.
I'm hiring one part-time person. Do I need a policy now?
Yes, before the first shift. California’s definition of an employee does not turn on hours worked, and the requirement starts at one employee.
Can a sole proprietor buy workers' comp through Mithril1?
You can, when an insurer accepts you as a covered owner. Some insurers include the owner and others do not, so we request quotes from those that write owner coverage and the insurer decides after reviewing your work.
Doesn't my health insurance cover a work injury?
It may pay for treatment, but it does not replace lost income. Owner-only workers’ comp or the EDD’s Disability Insurance Elective Coverage fills that gap.
If I incorporate, can I opt out of workers' comp?
An officer or director who owns at least 10% of the stock can sign a waiver, and a sole shareholder of a private corporation is excluded unless coverage is elected.