Workers comp coverage gap analyzer
Workers compensation coverage gaps are the silent risk in small-business insurance: you bought a policy, you think you're covered, and then a 1099 contractor gets injured on your jobsite or a sole-proprietor partner crashes a company truck and you find out coverage didn't extend. This tool reads our state-facts dataset for your state and entity type, then walks you through every applicable gap with the rule citation.
Coverage gap analyzer
Find every workers comp gap, by state, entity, and headcount mix.
W-2 employee coverage required
Alabama rule: Employers with 5 or more employees are required to carry workers' compensation insurance.
LLC member self-coverage optional
Alabama allows LLC members to elect in or out. Most carriers default to excluded; check your declarations page.
1 1099 contractor, request COIs
General contractors can be held liable for injuries to employees of uninsured subcontractors.
Penalty for going uninsured
Failure to carry workers' compensation insurance is a misdemeanor, punishable by fines up to $1,000 and/or imprisonment up to one year, plus potential civil penalties.
How this tool works
Workers comp coverage rules sit at the intersection of state law and entity choice. Five categories of gap account for nearly every uninsured-injury claim we have seen reported in case law: (1) sole-proprietor or LLC member self-coverage missing where state law requires it, (2) corporate officers covered when they should have been excluded (or vice versa, where exclusion is barred), (3) 1099 contractor injured with no COI on file, (4) employer below the state coverage threshold but with one disputed employee, and (5) excluded job duties (typically domestic, agricultural, or casual labor in some states).
The tool reads the relevant fields from our state-facts dataset, including coverage_threshold, sole_proprietor_self_coverage_required, llc_member_self_coverage_required, owner_exclusion_allowed, subcontractor_liability_summary, and penalty_for_noncoverage, then matches them against your inputs (entity, headcount, contractor count) to surface every applicable gap. Each gap is tagged by severity: High = fix before next jobsite, Medium = fix before policy renewal, Low = monitor, Info = context for decision-making.
Severity is conservative. We tag a gap as High when the inputs would, under state law, plausibly leave a worker injury uninsured. Medium gaps create premium-charge exposure at audit. Low gaps usually only matter for severe injuries or worst-case scenarios. The tool does not invent severity, every flag traces to a rule in the dataset.
A common pattern: a small construction company set up as a single-member LLC in a state that does not require LLC member self-coverage, with three W-2 employees and two recurring 1099 subcontractors. Three gaps surface: (a) LLC member self-coverage is optional, but going without it leaves the owner uninsured for their own injury; (b) W-2 coverage is required at headcount of 1+; and (c) 1099 contractor pass-through liability applies if subs are uncovered. Mitigation: opt into LLC member coverage at policy bind, confirm carrier accepts the W-2 policy, and collect COIs from both subs before the next mobilization.
Frequently asked questions
Do I need workers comp if I have only one employee?
In most states, yes. The tool reads your state's exact coverage threshold from the rating-bureau filing and tells you the rule. A handful of states (TX, parts of FL for very small employers) have unusual carve-outs; the tool surfaces those.
Does workers comp cover me as the owner?
It depends on entity type and state. Sole proprietors are usually NOT auto-covered and must opt in. Single-member LLC members are usually NOT auto-covered. Corporate officers usually ARE auto-covered but can elect out where state law allows. The tool flags each case based on your state.
What is subcontractor pass-through liability?
In most states, if your 1099 contractor is uncovered and gets injured, the workers comp claim falls back to YOU as the general contractor. The tool reads your state's subcontractor-liability summary and highlights the rule. Mitigation: collect a Certificate of Insurance from each contractor before they start work.
What is the penalty for going uninsured?
Penalties range from civil fines ($100-$1000 per uninsured employee per day) to criminal misdemeanor or felony charges in stricter states (CA, NY). The tool shows your state's exact penalty language inline.
Can corporate officers be excluded from coverage?
In most states, yes, by filing an officer-exclusion form. The tool flags whether your state allows it. Some states do not permit it (mostly monopolistic states); others cap the wages that can be excluded.