There are two common reasons individuals seek optional coverage as independent contractors or small employers:
- to get clearance to enter commercial relationships with other businesses who need this condition to enter a contract
- to ensure coverage for themselves if they are injured working for consumers or homeowners.
When a self-employed person or small business applies for personal coverage with the WCB, the WCB must determine:
- the operations of the business
- the nature of the commercial activity
- the reason for purchasing coverage.
The eligibility requirements and consequences of WCB coverage are distinct depending on whether coverage is for commercial work with other businesses or for work with consumers.
The WCB decides if you are an independent contractor based on a number of criteria which, taken together, prove that the service provider is significantly and economically independent from the contractors who hired them. For example, do you:
- employ other workers and meet a minimum payroll threshold?
- work mainly within your own business establishment?
- have multiple customers?
- own or lease a major piece of equipment?
- control your work and payment schedule?
If the WCB decides that you are an independent contractor, you must purchase coverage for your workers, but you can also purchase coverage for yourself as an employer. If you don't employ workers, you can purchase Personal Coverage as an independent business.
If you do not purchase this coverage, however, you and your workers will be considered workers of the contractor who hired you.
If you own a business or are self-employed, you do not have to purchase workers compensation coverage for yourself. However, if you do not purchase Personal Coverage, there is no WCB insurance if you are injured or become ill due to your job.
However, the good news is that Personal Coverage may be available to provide workers compensation benefits to you. Personal Coverage is available to self-employed people and business owners including sole proprietors, business partners and directors of corporations.
This coverage provides similar benefits and services as those given to workers when they are injured at work. These include:
- income replacement benefits
- payment of allowable medical costs
- travel expenses if travel is required for medical treatment
- permanent impairment awards
- vocational rehabilitation.
To find out if you’re eligible for Personal Coverage, contact our Assessment Services Department.
In Winnipeg: 204-954-4505
Toll-free: 1-855-954-4321, ext. 4505
Please note that if your business is in a non-mandatory industry and you choose to purchase Optional Coverage, you must provide WCB coverage for all employees in your business. You cannot selectively cover some workers and not others in a single business.
The WCB rate is the same for Personal Coverage as it is for workers in the same industry classification. Your WCB rate is based on your industry classification (a group of similar businesses) and your past claims costs (if any). Your premium is based on your WCB rate and how much of your income you want to insure.
For example, if your WCB rate is $1.25 and you want to cover $30,000 in annual income, your premium would be $375. We will tell you your WCB rate when you call to register.
You can purchase WCB coverage for any amount of annual income within the range set by the WCB. For 2020, the minimum is $25,290 and the maximum is $513,990.
When deciding how much coverage to purchase, you should consider your income level and your other sources of coverage. Buying too little coverage could mean your benefits will not be enough to cover your day to day, but buying more coverage than you need could mean you pay higher premiums than necessary. Before making your decision, you may want to consult with your financial advisor or private insurance carrier. See Income Replacement Amounts for Different Levels of Coverage.
If you decide to buy coverage for more than the minimum income level, you will need to provide proof of your earnings to receive income replacement benefits above the minimum. You can provide proof of your earnings when you purchase/renew your personal coverage or when you make a claim for income replacement benefits due to a work-related injury or illness. By providing proof of earnings when you purchase or renew your coverage, you will receive the full income replacement benefits you are entitled to quicker, should you need to make a claim. If you decide to provide proof of your earnings when you purchase or renew your coverage, your verified earnings level will remain in effect for the current and next year.
If you choose not to provide proof of your earnings at the time of purchase/renewal and you get hurt or sick at work, your income replacement benefits will be based on the minimum level of coverage at first. Your benefits will be retroactively adjusted once we verify a higher level of earnings.
Note: If you purchase more than the minimum, and your annual income falls between the amount when you purchase coverage and the amount when you make a claim for income replacement, you can ask us to refund the difference.
To verify your earnings, we review your income tax returns and supporting documents from the previous one to two years. We may obtain this information from Canada Revenue Agency (CRA) or another independent source signed by a certified accountant On occasion, we may require additional documents to verify your earnings.
Directors With 50 Per Cent or More Ownership
To calculate earnings for Directors with 50 per cent or more ownership in a corporation, we add the Director's shareholding percentage of net business income and depreciation/capital cost allowance to your reported T4 income.
Directors With Less Than 50 Per Cent Ownership
To calculate earnings for Directors with less than 50 per cent ownership in a corporation, we only consider reported T4 income.
Sole Proprietors and Partners
To calculate earnings for sole proprietors and partners, we add the deductions taken for depreciation expense/capital cost allowance and Business Use of Home Expense to your reported Net Business Income.
For example, if your income tax return recorded Net Business Income of $20,000, a Capital Cost Allowance deduction of $4,000 and a Business Use of Home Expense deduction of $1,000, we would calculate your earnings at $25,000.
Once we have calculated your earnings, income replacement benefits are based on the lesser of:
the level of coverage you purchased
the amount of earnings we can verify you earned in previous years.
When we approve the level of coverage requested based on the information provided, your coverage level will remain in effect for the current and next year. You may adjust and re-calculate your earnings at any time.
Circumstances change. We recommend that you verify your earnings level at least once a year, before December 31. Your coverage will be automatically renewed every January 1; we will use any new information provided to us before December 31 to set your premium for the next year.
Your coverage will come into effect once your application is accepted. Personal Coverage remains in effect until you cancel coverage or until we cancel your coverage because you did not comply with our Reporting and Payment Requirements.
We will renew your Personal Coverage automatically on January 1 of each year at the same coverage level. If you purchased the minimum level of coverage, you will be renewed at the new minimum level of coverage, which we recalculate annually.
For example, if you purchased the minimum level of coverage for 2018 ($24,060), when your coverage is renewed January 1, 2019, your coverage level is increased to the new 2019 minimum level of $24,710.
If you purchased more than the minimum level of coverage, you will be renewed at the same level without any changes.
To cancel your coverage or change the level of coverage you have, contact the Assessment Services Department. Be sure to let us know of any changes you need by December 31 of each year, especially if you are cancelling your coverage or want to reduce your level of coverage. Otherwise your coverage will be automatically renewed on January 1 at the current level of coverage.
Seek medical attention for your injury or illness. Be sure to tell your doctor your injury or illness is work-related. As soon as you can, Report Your Injury to the WCB.
You may report the injury over the phone by calling the Claim Information Centre at (204) 954-4321 or toll free at 1-855-954-4321 from 8:00 a.m. to 7:00 p.m. Monday to Friday.