Every state except Texas and South Dakota requires companies to carry workers’ compensation insurance. But whom you have to cover and how you buy this insurance depends on where you operate. Use the tool below to see what your state requires.
Types of workers’ compensation insurance in states
Options for getting workers’ compensation insurance will depend on your state.
If you do business in North Dakota, Ohio, Washington or Wyoming, you'll need to purchase insurance coverage from monopolistic funds administered by those state governments. Private workers' compensation insurance is not available. Puerto Rico and the U.S. Virgin Islands have monopolistic state funds too.
The other states offer some combination of the following:
Private insurance companies
Most businesses — except those in the monopolistic states of North Dakota, Ohio, Washington and Wyoming — will most likely purchase workers’ compensation insurance from a private insurance company. Shop around to find the best workers’ comp coverage for your business.
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Self-insurance
Self-insured businesses commit to paying for workers’ compensation benefits out of pocket instead of purchasing insurance policies. Which injuries are eligible and how claims are paid out don't change.
Usually, states only allow very large companies with extensive resources to self-insure, since smaller companies might not be able to cover the costs of workers’ comp benefits themselves.
Many states allow companies in the same industries, like construction, to create group self-insurance pools. These companies share the costs of claims administration and excess insurance coverage.
Assigned risk pools
An assigned risk pool or assigned risk plan is a workers’ compensation insurance program that will sell coverage to businesses that are denied by private insurance companies. Assigned risk pools or plans are available in every state except the four monopolistic fund states (North Dakota, Ohio, Washington and Wyoming) and the National Council on Compensation Insurance often administers them.
Workers' compensation insurance costs may be higher for these harder-to-insure businesses.
What if you have employees in multiple states?
You have to insure your employees in accordance with the law where they're based.
For example, say you have employees in California, Ohio and Texas. To cover them:
- Every California employee must be covered by private insurance.
- For your Ohio employees, you'll have to buy coverage through the Ohio Bureau of Workers' Compensation.
- You technically don't have to provide coverage for your Texas employees, in accordance with that state's laws. However, we recommend that businesses with Texas-based workers buy coverage to protect themselves from lawsuits by injured employees.
Who counts as an employee?
In most states, you only have to buy workers' comp for your W-2 employees.
In general, W-2 workers have to show up at a set place and time to do their jobs. They usually receive a regular paycheck with taxes withheld. Contractors generally set their own hours and may be paid more flexibly, like per project.
But just calling someone a "contractor" doesn't make them one. That's especially the case if you do things like setting their work schedule. If your state government suspects that you're misclassifying employees as contractors, you might get audited. The audit itself can be expensive. Then, you may be penalized afterward with fines or, in extreme cases, jail time.
Talk to an employment attorney if you have questions about how to classify your employees.
Common exemptions to workers' comp requirements
In addition to contractors, many states exempt the following categories of employees from workers’ compensation requirements:
- Farmworkers. Many states don’t require workers’ comp coverage for agricultural workers at all. Some only require it if payroll exceeds a certain threshold or the farm has a certain number of employees.
- Domestic workers employed in private homes. This includes house cleaners and nannies. Some states require workers’ comp coverage if these employees work more than a certain number of hours per week.
- Real estate agents. Workers' comp isn't needed if all their compensation is commission-based.
- Federal employees. The Federal Employees' Compensation Act covers these workers.
- Railroad workers. The Federal Employers Liability Act protects them.
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Do owners and officers need workers' comp?
If you are a business owner, corporate officer, member of an LLC or hold another leadership position in your business, you may be able to request an exemption so you don't have to buy workers' comp for yourself. These rules may extend to your spouse or immediate family members who work in the business, too.
Monopolistic states work the opposite way. Owners and officers are automatically excluded from coverage. If you want it, you have to opt in.
Your state may have different rules for the construction industry. Since construction is high-risk work, some states require owners and officers of construction companies to be counted as employees and covered by workers' comp. For example, California requires the owners of roofing, tree service, asbestos abatement and HVAC business to have workers' comp coverage .
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- 1. California Legislative Information. SB-216 Contractors: workers’ compensation insurance: mandatory coverage. Accessed Apr 24, 2026.
