Do You Need Workers’ Compensation Insurance If You Only Have a Few Employees
Key Takeaway
Even if your business has just one or two employees, you may still be legally required to carry workers’ compensation insurance. This policy helps cover medical expenses, lost wages, and legal costs if an employee is injured or becomes ill due to work.
What Is Workers’ Compensation Insurance
Workers’ compensation, often called workers’ comp, is a type of insurance that provides benefits to employees who suffer job-related injuries or illnesses. It typically covers:
Medical treatment
Lost wages during recovery
Disability benefits
Rehabilitation services
Death benefits for dependents if a fatal injury occurs
In exchange, employees give up the right to sue the employer for negligence in most cases, which protects your business from costly lawsuits.
Is Workers’ Compensation Required for Small Businesses
Yes—in most states, businesses are legally required to carry workers’ compensation insurance even if they only have one employee. Some states have exceptions for family members, contractors, or part-time workers, but the rules vary.
State laws determine when coverage is required, and penalties for not complying can include fines, stop-work orders, or personal liability for injuries.
Andrade Mejia Insurance Agency can help you understand the requirements in your specific state and ensure you remain in compliance.
What If You Use Independent Contractors
Independent contractors are usually not covered by your workers’ compensation policy, but that doesn’t mean you're off the hook. If a contractor is misclassified or injured while working for you, your business could still face liability or legal scrutiny.
Make sure to correctly classify workers and consult with your insurance agent to determine whether coverage is needed.
What If You’re a Sole Proprietor or Family-Owned Business
Some states allow sole proprietors, partners, or family-run businesses to opt out of workers’ compensation. But even if it’s not required, it can still be a smart decision.
If you or a family member is injured on the job and can't work, you’ll be responsible for all medical bills and lost income unless you're covered under another policy.
Benefits of Carrying Workers’ Compensation Insurance
Legal compliance with state laws
Protection against lawsuits from injured employees
Coverage for medical expenses and lost income
Peace of mind knowing your team is protected
Support for employee morale and retention
Small injuries can turn into big bills—and even one claim could financially damage a small business.
How Much Does Workers’ Compensation Insurance Cost
The cost depends on:
The type of work performed (risk level)
Number of employees
Payroll size
Claims history
State regulations
High-risk industries like construction, roofing, or transportation pay more than office-based businesses. Andrade Mejia Insurance Agency can shop multiple carriers to find a cost-effective solution that fits your business size and budget.
Final Thoughts
Just because your team is small doesn’t mean your risks are. Workers’ compensation insurance is a vital safeguard for your business and employees, whether you have one worker or one hundred.
Not sure if you're required to carry it? Need help finding an affordable policy? Contact the experienced team at Andrade Mejia Insurance Agency for a personalized consultation and quote.