In North Carolina shell polices are not allowed. So if you hire a 1099 worker you are responsible for having them give proof of insurance. The way that it is done is they have the insurance company underwriting their policy send you a copy of their proof of insurance. You hold those copies in your records so when you do your annual audit you provide copies of their proof of insurance to you insurance company. With all that said you are responsible for safety in your shop and holding them to those standards. I would read and hold yourself to the OSHA standards needed for you shop. You can get that info from your insurance company they can also answer any questions about any additional liability insurance needed for your situation. Me I have worker comp and I have to cover myself, I also carry a hefty liability policy and commercial insurance on my vehicle and trailer.
Richard, I am set up pretty much the same way, but do not carry workers comp as I do not have employees. My 1099 contractors work with their own equipment on GC projects and are all insured, so I have their W9’s and insurance certificates on file.
Why do you need workers comp?
BTW, my shop will need quite a bit of work to make OSHA happy, so I am careful who goes in there. No guard on the table saw, spray without a proper spray booth, about 4,000bf of lumber inside plus plywood, so the space and isles for walking is pretty tight.