What happens if you don't have workers comp?

The risk is bigger than a fine

Going without required coverage can cost far more than a policy. States can fine you, shut down your job sites, and make you pay an injured worker's full medical bills and wage benefits yourself. One serious injury can cost more than many years of premium.

Common penalties

The exact penalties differ by state, but they often include:

• Stop-work orders that close your business or job site until you get coverage.
• Civil fines, often based on how long you were uninsured or on the premium you avoided.
• Criminal charges. In many states, knowingly going without coverage is a misdemeanor or worse.
• Paying the worker's benefits yourself, sometimes with added penalties.
• Losing the protection from lawsuits that coverage gives you.

Examples from the states

In California, the Department of Insurance says operating without coverage is a misdemeanor and can lead to a stop order and penalties of up to $100,000. In Alabama, going without required coverage is a misdemeanor with a fine of $100 to $1,000, and the employer can owe twice the normal benefits. New York and Florida also issue penalties and stop-work orders. Each of our state guides has an "Operating without coverage" section with that state's rules.

You can be sued

Workers' comp usually stops injured employees from suing you. Without it, the worker may be able to sue you for the full value of the injury. In many states, an uninsured employer also loses defenses it could otherwise use, such as arguing that the worker was careless.

If you find a gap

Get coverage right away, before any more work is done. Tell your agent the truth about when your coverage lapsed. If a worker was hurt during the gap, talk with a lawyer and your state agency about your duties. Do not ask the worker to keep it quiet or to use their health insurance.