Do I need workers compensation insurance?

Workers Compensation Insurance Requirements in Arizona

In Arizona, whether you need workers compensation insurance depends on the size and nature of your business. Understanding these requirements is essential for compliance and protecting your operations.

When Workers Compensation Insurance Is Required

• Employers with employees: If your business has one or more employees (full-time, part-time, or seasonal), you are generally required to carry workers compensation insurance.
• Construction industry: Businesses in construction must carry workers compensation insurance regardless of the number of employees.
• Subcontractors: Subcontractors with employees are also required to maintain coverage.

Exemptions and Optional Coverage

• Business owners without employees: Sole proprietors and partners without employees are not required to have workers compensation insurance but may choose to purchase it voluntarily.
• Corporate officers: Officers of corporations can opt out of coverage by filing a waiver with the Industrial Commission of Arizona.

Operational Considerations

• Compliance: Ensure you register for workers compensation insurance before hiring employees to avoid penalties and business interruptions.
• Recordkeeping: Maintain detailed injury and claim records as required by the Industrial Commission of Arizona.
• Payroll integration: Incorporate workers compensation premiums into your payroll system for accurate accounting and budgeting.
• Insurance shopping: Compare rates from authorized insurers to optimize costs and coverage.

As of 2026, always verify current requirements with the Arizona Industrial Commission or a licensed insurance provider, as regulations and thresholds may change.