What insurance is required before hiring employees?

Required Business Insurance Before Hiring Employees in Maryland

Before hiring employees in Maryland, businesses must secure specific insurance coverage to comply with state regulations and protect both the company and its workforce.

Key Insurance Requirements

• Workers' Compensation Insurance: Maryland law mandates that most employers with one or more employees carry workers' compensation insurance. This coverage provides benefits to employees who suffer work-related injuries or illnesses. It is essential to obtain this insurance before the first employee starts work.
• Unemployment Insurance: Employers must register with the Maryland Department of Labor to pay unemployment insurance taxes. While this is not an insurance policy you purchase from a private carrier, it is a required payroll tax that funds unemployment benefits for eligible former employees.
• Disability Insurance: Maryland does not require employers to provide disability insurance, but it can be offered voluntarily as part of employee benefits.

Additional Operational Considerations

• Liability Insurance: While not legally required before hiring, general liability insurance is recommended to protect your business from third-party claims.
• Employee Classification: Correctly classifying workers as employees or independent contractors impacts your insurance obligations and payroll taxes. Misclassification can lead to compliance issues and penalties.
• Recordkeeping and Reporting: Maintain proper records of insurance policies and employee payroll to ensure compliance during audits or claims.

As of 2026, verify insurance requirements periodically as state regulations may update. Consulting with a licensed insurance broker familiar with Maryland business operations can streamline compliance and operational setup.