How much does excluding actually save?

It depends on the class code and the state, and it is usually smaller than owners expect. Comp is rated on payroll by class, and many states cap the payroll attributed to an included officer — often well below what the owner actually earns — so the premium you avoid is calculated on that capped figure rather than on your real compensation. Get the number quoted both ways before deciding; on a low-hazard class the saving can be modest enough that the coverage is worth keeping.

What is the health insurance problem?

Health plans commonly exclude injuries arising out of and in the course of employment, on the reasonable assumption that workers compensation covers them. An owner who has excluded themselves from comp and is then injured at work can find the comp carrier saying "you are excluded" and the health plan saying "this is work-related" — with no policy responding. It is not universal and it is common enough to check your specific plan wording before signing the exclusion form.

Do sole proprietors need comp at all?

Usually not by statute if there are no employees, and frequently yes in practice. Most states do not require a sole proprietor with no staff to carry it, but general contractors and clients routinely do — and where you have no policy, a hiring contractor may add your payments to THEIR audit as uninsured subcontractor cost. A ghost policy, which covers the business with the owner excluded, exists precisely to produce a certificate in that situation.

What about LLC members and partners?

Treated differently again, and by state. Some states default members and partners to excluded with an option to elect in; others default them to included with an option to opt out; a few restrict the choice by entity type or by the number of officers. Because the default runs the wrong way in about half the country, the practical advice is to state what you want explicitly rather than assuming the default matches your intention.

Can an owner or officer be excluded from workers compensation, and should they be?

In most states yes, within limits — and it is a real decision rather than a formality. Excluding yourself removes your payroll from the premium calculation, which lowers the cost. It also removes you from cover, so an injury at work is not a comp claim and your health insurance may decline it as work-related. That last part is the piece owners miss: excluding yourself can leave you with no coverage at all for a workplace injury, rather than moving it to another policy.

Call/Text(626) 344-2158

/ Start here

Tell us the situation.

A licensed human replies the same business day — not an auto-responder, and not five producers calling at once. We shop it across our carriers and tell you if the policy you already have is the right one.

We use this to quote and service your insurance, and we do not sell it or pass it to lead networks. Privacy policy.

The detail

Rules on excluding owners, officers, members and partners from workers compensation are set state by state, including how many officers may be excluded and whether the entity type permits it.
National Council on Compensation Insurance

What this means for you

Check your health plan before excluding. Many exclude injuries arising out of employment, so an excluded owner can fall between two policies entirely.
Excluding does not always remove the payroll from the audit. Some states cap the payroll attributed to an included officer instead, which changes the maths.
A contract may require you to be included. General contractors and many clients ask for comp covering everyone on site, owners included, and a certificate showing an exclusion can fail the requirement.
It is reversible, and only at the right time. Election and revocation usually happen at specific points, not whenever you decide.

Go deeper on any of these

The workers comp audit

Need this handled?

We do the filings, and we place the accounts other brokers decline — lapsed authority, claims history, new ventures. Tell us the situation and a licensed human replies the same business day.