Do owners, officers, and family members need coverage?

It depends on business type and state

The rules for owners vary more than almost any other part of workers' comp. They depend on your state, how your business is set up, how much of it you own, and sometimes your industry. An owner's choice never changes the duty to cover employees.

Sole proprietors and partners

In most states, sole proprietors and partners are not covered automatically. They can often choose to add themselves to the policy. A sole proprietor with no employees often does not need a policy at all, but a client or general contractor may still require one.

Corporate officers and LLC members

Corporate officers are often treated as employees and counted on the policy. Many states let officers who own part of the company opt out by filing a form. LLC members may be treated like partners or like officers, depending on the state.

Construction often has tighter rules. In Florida, for example, only up to three officers or members of a construction business can claim an exemption, each must own at least 10% of the business, and the application costs $50.

Family members

Relatives who work in the business usually count as employees. Massachusetts, for example, requires coverage for family members even if they are the only employees. Some states have exceptions for close family on farms or in household work.

Should owners stay covered?

Opting out lowers your premium, but it also means your own work injuries are not covered. Your health insurance may refuse to pay for a work injury. If your work is physical, staying covered can make sense. Ask your agent how owner pay is counted, since many states use a minimum and maximum payroll amount for owners.

Put the choice in writing

Follow your state's process to include or exclude owners, and keep the paperwork. Confirm the choice on the policy itself, and review it whenever ownership changes.