Practical insurance guide

Business Insurance Requirements by State

A state-by-state table of the three insurance rules most small businesses meet first: who needs workers' compensation, minimum auto liability limits and state paid leave or disability programs.

By PolicyBenchmark Editorial TeamPublished Mar 14, 2026March 14, 2026Updated Oct 3, 2026October 3, 2026

Three state rules reach most small businesses first: who must carry workers' compensation, the minimum auto liability limits, and whether payroll must fund a state paid leave or disability program. As of October 3, 2026, 33 jurisdictions apply workers' compensation from the first employee or set no minimum headcount, and 13 states start at three, four or five employees, with exceptions that can reach smaller employers (construction work in several states, and hours or wages tests in Michigan and Wisconsin).

Five states take a different approach. Kansas uses a payroll test, Rhode Island's statute names no number, Wyoming requires coverage only for listed extrahazardous work, Texas leaves coverage optional for most private employers (Texas Department of Insurance), and South Dakota's labor department says no law requires the insurance, although a covered employer that does not secure compensation loses the law's protection (South Dakota DLR; SDCL 62-5-7).

Every figure in the table below comes from an official source checked on October 3, 2026; each cell links to it, and each state name links to a fuller guide. This page is general information, and the agencies linked from each state guide decide how a rule applies to your business.

How to read the table

Workers' compensation shows the general rule. Exemptions, owner elections and industry rules (construction especially) change the answer for particular businesses, so read the state guide before deciding a worker or owner is excluded. Our workers' compensation guide explains what the coverage pays for.
Auto liability figures are bodily injury per person / bodily injury per accident / property damage, and in most states they are the legal minimums. Iowa's figures are the amounts its statute defines as proof of financial responsibility, and New Hampshire's are proof amounts the state can require after certain convictions or a reported accident; Michigan's cell shows its default limits, because the lower figures apply only when the insured chooses them in writing.
Add-on coverages such as personal injury protection (no-fault) or uninsured motorist coverage are required in several states, sometimes with different rules for commercial and fleet policies; the state guides list them. Commercial and for-hire vehicles can face different or higher federal or state requirements, covered in our commercial auto guide.
Paid leave names the state program, if any. "No state program" means NCSL's table (updated November 7, 2025) lists none for that state; a law passed in 2026 may not appear there yet.

Requirements by state

State	Workers' compensation	Auto liability figures (bodily injury per person / per accident / property damage)	Paid leave or disability program
Alabama	5 or more employees; any number for on-site construction of new single-family homes	$25,000 / $50,000 / $25,000	No mandatory state program
Alaska	1 or more employees	$50,000 / $100,000 / $25,000	No state program
Arizona	Any regularly employed worker; no minimum headcount	$25,000 / $50,000 / $15,000	No state program
Arkansas	3 or more employees; 2 in building work; 1 for subcontracting contractors and subcontractors	$25,000 / $50,000 / $25,000	No mandatory state program
California	1 or more employees; some contractor license classes with no employees	$30,000 / $60,000 / $15,000	State Disability Insurance (Disability Insurance and Paid Family Leave); 1.3% employee withholding in 2026
Colorado	1 or more employees	$25,000 / $50,000 / $15,000	FAMLI; 0.88% premium in 2026
Connecticut	1 or more employees	$25,000 / $50,000 / $25,000 (§ 38a-335(a))	CT Paid Leave; 0.5% employee deduction in 2026
Delaware	1 or more employees	$25,000 / $50,000 / $10,000	Delaware Paid Leave; claims since January 1, 2026 (10 or more employees)
District of Columbia	1 or more employees	$25,000 / $50,000 / $10,000	DC Paid Family Leave; 0.75% employer-paid tax in 2026
Florida	4 or more employees; 1 or more in construction; 6 regular or 12 seasonal in agriculture	PIP $10,000 + property damage $10,000	No mandatory state program
Georgia	3 or more regular employees, including officers and LLC members	$25,000 / $50,000 / $25,000	No state program
Hawaii	1 or more employees	$40,000 / $80,000 / $20,000	Temporary Disability Insurance (employer-provided); no paid family leave program
Idaho	1 or more employees	$25,000 / $50,000 / $15,000	No state program
Illinois	1 or more employees, including part-time	$25,000 / $50,000 / $20,000	No state program
Indiana	Every covered employer; no minimum headcount	$25,000 / $50,000 / $25,000	No state program
Iowa	No minimum headcount; farms covered at $2,500 prior-year non-family payroll	$20,000 / $40,000 / $15,000 proof-of-financial-responsibility amounts	No state program
Kansas	Payroll over $20,000 (prior year or expected current year), excluding family wages	$25,000 / $50,000 / $25,000	No state program
Kentucky	1 or more employees; employers engaged solely in agriculture excluded	$25,000 / $50,000 / $25,000 or $60,000 single limit	No mandatory state program
Louisiana	1 or more employees	$15,000 / $30,000 / $25,000	No state program
Maine	Any private employer with employees; no minimum headcount	$50,000 / $100,000 / $25,000	Maine PFML; benefits since May 1, 2026
Maryland	Every employer with covered employees; no minimum headcount	$30,000 / $60,000 / $15,000	FAMLI; contributions start January 1, 2027
Massachusetts	Every employer; no minimum headcount	$25,000 / $50,000 / $30,000	PFML; 0.88% total rate (25 or more covered individuals) in 2026
Michigan	3 or more at one time, or 1 working 35+ hours a week for 13+ weeks	$250,000 / $500,000 / $10,000 (property damage in another state) unless lower limits are chosen in writing (not below $50,000 / $100,000); PIP and PPI also required	No state program
Minnesota	1 or more employees, including part-time	$30,000 / $60,000 / $10,000	Minnesota Paid Leave; 0.88% premium in 2026
Mississippi	5 or more regularly employed	$25,000 / $50,000 / $25,000	No state program
Missouri	5 or more employees; 1 or more in construction	$25,000 / $50,000 / $25,000	No state program
Montana	1 or more employees	$25,000 / $50,000 / $20,000	No state program
Nebraska	1 or more employees	$25,000 / $50,000 / $25,000	No state program
Nevada	1 or more employees	$25,000 / $50,000 / $20,000	No state program
New Hampshire	1 or more employees	$25,000 / $50,000 / $25,000 proof amounts; general insurance requirement unconfirmed	Voluntary NH PFML plan
New Jersey	1 or more employees (owners of partnerships, LLCs and sole proprietorships not counted)	$35,000 / $70,000 / $25,000 (Standard Policy); Basic Policy also meets the law	Temporary Disability Insurance and Family Leave Insurance
New Mexico	3 or more workers; any number in licensed construction activity	$25,000 / $50,000 / $10,000	No state program
New York	1 or more employees	$25,000 / $50,000 / $10,000 ($50,000 / $100,000 for death)	Disability Benefits and Paid Family Leave (insured)
North Carolina	3 or more regular employees; 1 or more where radiation is involved	$50,000 / $100,000 / $50,000	No state program
North Dakota	1 or more employees; WSI state fund only	$25,000 / $50,000 / $25,000	No state program
Ohio	1 or more employees, through the BWC state fund; or approved self-insurance	$25,000 / $50,000 / $25,000	No state program
Oklahoma	Every employer; no minimum headcount, with statutory exclusions	$25,000 / $50,000 / $25,000	No state program
Oregon	1 or more employees	$25,000 / $50,000 / $20,000	Paid Leave Oregon; 1% total contribution in 2026
Pennsylvania	1 or more employees	$15,000 / $30,000 / $5,000	No state program
Rhode Island	Employers that regularly employ employees; statute states no minimum number	$25,000 / $50,000 / $25,000 or $75,000 single limit	TDI and Temporary Caregiver Insurance; 1.1% employee deduction in 2026
South Carolina	4 or more regular employees and $3,000+ prior-year payroll	$25,000 / $50,000 / $25,000	No mandatory state program
South Dakota	The agency says no law requires insurance; a covered employer that does not secure compensation loses the law's protection	$25,000 / $50,000 / $25,000	No state program
Tennessee	5 or more employees; 1 or more in construction; coal mining employers cover all employees	$25,000 / $50,000 / $25,000; or $65,000 single limit	No mandatory state program
Texas	Optional for most private employers; required for construction contractors on public projects	$30,000 / $60,000 / $25,000	No mandatory state program
Utah	1 or more employees	$30,000 / $65,000 / $25,000 or $90,000 single limit	No state program
Vermont	1 or more employees	$25,000 / $50,000 / $10,000	Voluntary VT FMLI plan
Virginia	3 or more regular employees; any underground coal mine operator	$50,000 / $100,000 / $25,000	Program enacted in 2026; contributions from April 1, 2028
Washington	1 or more employees; L&I state fund or self-insurance	$25,000 / $50,000 / $10,000	Paid Leave; 1.13% premium in 2026
West Virginia	1 or more regular employees	$25,000 / $50,000 / $25,000	No state program
Wisconsin	3 or more employees, or 1 or more paid $500+ in a quarter; farms that employ 6 or more workers on the same day for any 20 days in a year	$25,000 / $50,000 / $10,000	No state program
Wyoming	Required for listed extrahazardous industries and occupations; optional otherwise; state fund	$25,000 / $50,000 / $20,000	No state program

Patterns worth knowing

In some states the state fund is the only source of coverage

In North Dakota, coverage must come from Workforce Safety & Insurance, and the agency says private insurers may not write it. Ohio employers insure through the Bureau of Workers' Compensation state fund and Washington employers through the Department of Labor & Industries state fund, unless they qualify to self-insure. Wyoming's Workers' Compensation Division provides coverage for the listed extrahazardous work.

Elsewhere a state fund can be one option among several. Montana's statute has employers choose self-insurance (Plan 1), an insurer (Plan 2) or the Montana State Fund (Plan 3) (MCA 39-71-401; MCA 39-71-2311).

Construction often has its own trigger

Several states apply workers' compensation to construction businesses at a lower headcount than other employers. Florida requires it for construction employers with one or more employees, against four for others (Florida Division of Workers' Compensation); Missouri and Tennessee use one against five (Missouri DWC, Tennessee BWC); and New Mexico covers licensed construction activity regardless of size (New Mexico WCA). Check the state guide for your trade before relying on the general threshold.

Paid leave programs

As of October 3, 2026, 12 states (California, Colorado, Connecticut, Delaware, Maine, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island and Washington) and the District of Columbia had paid family and medical leave or disability insurance programs in operation; each state guide links its program's own pages. Hawaii requires employer-provided Temporary Disability Insurance. Maryland's program begins collecting contributions on January 1, 2027 (Maryland FAMLI), and Virginia enacted a program in 2026 that begins collecting contributions on April 1, 2028 (Code of Virginia § 60.2-801).

New Hampshire and Vermont offer voluntary plans. The other 33 states have no state-run program in NCSL's table.

In most states the auto figures are a floor

In most states the table shows the lowest liability limits the law allows. Iowa's figures are proof-of-financial-responsibility amounts (Iowa Code § 321A.1(11)) and New Hampshire's are proof amounts the state can require after certain convictions or a reported accident (RSA 264:20), and in Kentucky, Tennessee, Rhode Island and Utah a single limit is an alternative to the split limits.

Some states set higher limits for particular vehicles: Florida taxis need $125,000 per person and $250,000 per occurrence of bodily injury liability (FLHSMV), and Louisiana sets higher minimums for motor carriers' vehicles over 20,000 pounds (La. R.S. 32:900). Leases, lenders and clients can also require more, so compare your contracts as well as the law.

Where to verify

Each state guide lists the workers' compensation agency, the auto source and the paid leave program for that state. For a set of questions tailored to your employee count and vehicles, use the state requirements checklist. Contracts and leases can set their own general liability limits, which no state table captures. To ask PolicyBenchmark for a follow-up about your business, request coverage help.

Frequently asked questions

Which states do not require workers' compensation for most employers?

Texas makes coverage optional for most private employers, though construction contractors on public projects must cover employees on the project (TDI-DWC employer fact sheet). South Dakota's labor department says no law requires the insurance, but an employer covered by the law that does not secure compensation can be sued or face claims for benefits plus twice the other compensation allowable (SDCL 62-3-11). Wyoming requires coverage only for the extrahazardous work its statute lists, and other employers may elect it (W.S. 27-14-108).

Do the auto minimums apply to commercial vehicles?

In most states they are the general minimums (Iowa's and New Hampshire's are proof amounts), but commercial and for-hire vehicles can face different or higher federal or state requirements, and some states set higher minimums for heavier or for-hire vehicles. Add-on rules can also differ: North Carolina does not require uninsured or underinsured motorist coverage on commercial-only or fleet-only policies, and Missouri only requires it to be offered for commercial motor vehicles and employer fleets of five or more passenger vehicles (G.S. 20-279.21; RSMo § 379.203). See the commercial auto guide and the state guide for your state.

Which states have paid family leave programs?

The 12 states and the District of Columbia listed under "Paid leave programs" above had programs in operation as of October 3, 2026. Maryland starts contributions in 2027 and Virginia in 2028, Hawaii requires temporary disability insurance, and New Hampshire and Vermont offer voluntary plans.

How current is this table?

Each source was checked on October 3, 2026. Rates and limits change, often on January 1, so confirm a figure with the linked source before you rely on it.

About this article

Published by: PolicyBenchmark Editorial Team
Published: March 14, 2026
Updated: October 3, 2026

This content is for informational purposes only and does not constitute insurance advice. Always consult with a licensed insurance professional before making coverage decisions.