Do I Need Worker's Comp Insurance? (2026 Guide)

Updated: February 2, 2026

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Contract requirements and the type of work you do can create the need for workers' comp before your state legally requires it. Many businesses get coverage earlier than their state threshold requires because clients demand certificates of insurance, financing agreements require it, or they want protection before hiring their first employee. For example, a solo house painter working on commercial properties might need proof of coverage to access job sites, even though they have no employees and their state doesn't mandate it yet.

Use this guide to check if common triggers apply to your situation, confirm whether the legal requirement applies to you and understand when coverage might be optional or necessary sooner than mandated.

Choose your next step:

TLDR Do You Need Workers’ Comp Answers (Fastest)
When do you need workers’ comp? (to see if your situation fits)
Is it required by law? (to see if it’s legally mandated)
Should you get it even if it’s not required?
What businesses typically require workers’ comp coverage?
What happens if you don’t have coverage?
What to think about moving forward
What you should do next

When Do Businesses Need Workers' Comp?

State law and your employee count determine when you should have workers' comp, but practical triggers usually come earlier. A landscaping business might plan to hire in spring but need coverage in winter to bid on commercial contracts that require proof of insurance upfront. Use this checklist to see whether you need to get coverage sooner rather than later.

You likely need workers' comp earlier if you:

Hire employees: Part-time, seasonal, and temporary workers count as employees, not just full-time staff, and even short-term help during busy periods can trigger the requirement.
Receive a certificate of insurance (COI) request: If a client or property owner asks for proof of workers' comp, you likely need it to start work.
Work on client sites or commercial properties: Clients typically require proof of coverage before allowing you or your crew onsite.
Perform physical labor or handle injury-prone work: Construction, cleaning, delivery, installation, and repair work create coverage expectations.
Work in a state with a one-employee threshold: Many states require coverage immediately at your first hire.
Switch from independent contractor work to having a crew: Moving from solo work to supervising others typically triggers the requirement.
Operate in a state that includes business owners in the requirement: Some states mandate coverage for sole proprietors, partners, or LLC members in certain industries.

Is Workers' Comp Required By Law?

Workers' comp requirements come from state law only, making it different from other coverage types like general liability or professional liability, which are part of licensing requirements. Each state sets its own rules for when businesses must carry workers' comp, and these rules differ significantly.

Check your state's workers' comp agency or department of insurance website to confirm whether your state requires coverage. Whether you need coverage depends on how your state defines these key elements:

Employee count thresholds differ by state

Most states require coverage at one employee, while others set thresholds at three to five employees. Texas and South Dakota don't mandate coverage for most private employers. Check your state's specific threshold to know when hiring triggers the requirement.

"Employee" definitions aren't uniform

Your state decides whether part-time workers, seasonal help, family members, and contractors count toward the threshold. Verify how your state classifies different worker types. Misclassifying employees as contractors can trigger penalties and leave you without required coverage even if you thought you were under the threshold.

Business owner inclusion rules change by state

Some states require sole proprietors, partners, officers, or LLC members to carry coverage, while others make it optional. Confirm whether your state includes owners in the requirement based on your business structure and industry. You may need coverage even without employees.

Industry-specific requirements create exceptions

Construction, roofing, trucking and other high-risk industries often face lower thresholds or mandatory coverage regardless of employee count. Check if your industry has special rules in your state. Standard thresholds may not apply to your type of work.

Multi-state operations add complexity

If you have employees or perform work across state lines, you'll likely need to meet each state's requirements separately. Verify coverage requirements for every state where you operate. You may need separate policies or special coverage that works across multiple states.

What Businesses Typically Need Workers' Comp?

Whether or not you're legally required to have workers' comp, some business types need coverage more than others. Industries with physical work, client site operations, or frequent contract requirements encounter the need for workers' comp earlier and more often. Use the table below to see if getting coverage should be a priority.


Construction trades (general contractors, electricians, plumbers)	Most commercial projects and subcontractor agreements demand proof of coverage due to high injury risk	Solo operators often need coverage to bid on commercial jobs even with zero employees; some states set lower thresholds for construction
Cleaning services (residential and commercial)	Commercial clients and property managers ask for certificates of insurance before work begins	Hiring one part-time or seasonal cleaner triggers requirements in most states; client facilities count as high-risk work
Landscaping and lawn care (lawn maintenance, arborists, gardening contractors)	Commercial property contracts and HOA work expect proof of insurance due to equipment and injury risk	Hiring two workers for spring and summer can trigger requirements; you may need coverage year-round once you cross the threshold even briefly
Home healthcare and personal care (in-home nurses, caregivers, physical therapists)	Healthcare agencies and facilities ask for coverage before allowing contract work	A single caregiver may trigger requirements due to physical work demands like helping patients move, bathe, or transfer
Delivery and logistics (courier services, moving companies)	Vehicle accidents and lifting injuries create client and insurer expectations for coverage	Authorities closely examine worker classification; calling workers contractors when they're employees means you needed coverage all along

What Can Happen When You Don't Have Workers' Comp?

Without workers' comp, you're at risk of direct injury costs plus regulatory penalties from your state. You'll be personally responsible for medical bills, lost wages, ongoing treatment costs, and state fines that often range from $1,000 to $10,000+ per violation depending on the severity and your location.

Compare the costs in the table below against your current cash reserves to decide whether you can absorb these expenses or need coverage in place. If the numbers concern you, verify your state's coverage requirements and get workers' comp insurance quotes to see how premiums compare to these injury costs.


Minor injury (cuts, sprains, burns)	Kitchen worker suffers second-degree burn from hot oil, needs emergency treatment, follow-up care and two weeks off work while healing	$2,000–$10,000	$1,000–$5,000 per violation	Restaurants, food service, catering, manufacturing, salons, cleaning services
Broken bones	Landscaper falls from ladder while trimming trees, breaks arm needing surgery, metal plate insertion, physical therapy and three months of lost wages during recovery	$15,000–$40,000	$2,500–$7,500 per violation	Construction, landscaping, roofing, window cleaning, painters, tree services
Back/spine injury	Mover injures lower back lifting heavy furniture down stairs, needs MRI, ongoing chiropractic treatment, potential surgery and permanent lifting restrictions that affect future work capacity	$30,000–$100,000+	$5,000–$10,000+ per violation	Moving companies, delivery services, warehousing, construction, HVAC installation, plumbing
Severe injury (amputation, permanent disability)	Construction worker's hand is caught in power saw causing partial amputation, needing multiple surgeries, prosthetics, retraining for different work and lifetime disability payments	$100,000–$500,000+	$10,000–$25,000+ per violation (plus potential criminal charges)	Manufacturing, construction, carpentry, metalworking, food processing, auto repair
Occupational illness	Cleaner develops chronic respiratory illness from years of chemical exposure, needing ongoing medical monitoring, medications, breathing treatments and reduced work capacity or early retirement	$50,000–$250,000+	$5,000–$15,000+ per violation	Cleaning services, manufacturing, auto body shops, salons, healthcare facilities, janitorial services

Should I Get Workers' Comp Insurance Even If It's Not Required Yet?

Even when you're not legally required to have workers' comp, consider getting coverage if any of these situations apply to you:

Clients frequently require certificates of insurance before allowing you to work onsite, especially on commercial properties or larger projects. Having coverage ready lets you bid on opportunities without delays.
Buying coverage before hiring your first employee lets you onboard workers immediately when you're ready, without waiting for a policy to be issued. Even part-time or seasonal help typically triggers the requirement in most states.
Switching to physical or onsite work increases relevance as injury risk grows and clients expect proof of insurance. A policy in place positions you for higher-value contracts.
Adding locations or expanding services can push you into required territory. Securing coverage before you hit thresholds means you're already prepared when growth happens.

Do I Need Workers’ Comp Insurance: Bottom Line

Except for Texas and South Dakota, all states require coverage once you hire employees, though thresholds vary from one to five employees. Once you determine coverage applies to you, the next decision is when to secure it.

Getting coverage before you're legally required helps you avoid gaps when hiring or bidding on contracts, while waiting until you hit thresholds risks losing opportunities if clients request proof of insurance earlier than expected. Consider the lead time for securing a policy and whether upcoming hiring plans or contract negotiations make early coverage worth the premium cost.

Do I Need Worker’s Comp Insurance: TLDR FAQ

If you're unsure whether you need workers' comp insurance, start with these common questions:

Do I need workers' comp insurance?

Yes, if you hire employees. Except in Texas and South Dakota, all states require coverage once you hire, though thresholds vary from one to five employees. You may also need it earlier if clients require proof of coverage for contracts or site access.

When does workers' comp become required?

Most states require it at your first hire, but some set thresholds at three to five employees. Contract requirements can create the need before your state legally requires it, especially for commercial properties or client facilities.

What happens if I don't have workers' comp when I need it?

You're personally liable for injured workers' medical bills (typically $15,000 to $25,000+), legal defense costs, and state fines ranging from $1,000 to $10,000. You'll also lose contract opportunities and may face stop-work orders.

Should I get coverage even if my state doesn't require it yet?

Consider getting it early if clients often ask for certificates of insurance, you're planning to hire soon, or you're switching to physical or onsite work. Having coverage ready helps you bid on contracts without delays.

How do I know if I'm required to have coverage?

Check your state's workers' comp agency website to confirm your employee threshold, whether part-time or seasonal workers count, if business owners must be covered, and whether your industry has special rules.

Workers' Comp Needs: Next Steps

Whether you've confirmed you need coverage or you're still weighing your options, ask yourself these questions to help you move forward:

What are workers' comp requirements for my business?
How much workers' comp coverage do I need?

If you want to learn more about worker’s comp insurance

If you're ready to compare costs and providers

How much does worker’s comp insurance cost?
Where can I get cheap worker’s comp insurance?
Which provider offers the best worker’s comp insurance for my business?

If you want to learn more about other coverage types

About Angelique Palenzuela-Cruz

Angelique Palenzuela-Cruz is a Content Writer at MoneyGeek specializing in business insurance. She focuses on general liability, workers' compensation and professional liability coverage, helping small business owners cut through policy jargon and understand what they're actually buying.

Angelique has spent over five years reporting on personal finance, with deep experience in both insurance and lending markets. Her psychology background also gives her a unique understanding of how people actually process difficult financial decisions, allowing her to meet readers where they are, simplify complex concepts and build decision making frameworks that give them confidence. Whether you're learning about policies, comparing providers or trying to figure out requirements, Angelique does the legwork, digging into regulations, analyzing policy language and testing her explanations against agent-level standards so you get straight answers without fluff.

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Do I Need Workers' Comp Insurance?