What insurance is required before hiring employees?

Required Business Insurance Before Hiring Employees in Delaware

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

Mandatory Insurance Types

• Workers’ Compensation Insurance: Delaware requires most employers to 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 to avoid penalties and ensure compliance.
• Unemployment Insurance: Employers must register with the Delaware Division of Unemployment Insurance and contribute to the state unemployment insurance fund. This is not traditional insurance purchased from a carrier but a required payroll tax that supports unemployment benefits for eligible former employees.

Additional Insurance Considerations

• General Liability Insurance: While not legally required, general liability insurance is highly recommended to protect your business from third-party claims related to bodily injury, property damage, or advertising injury.
• Commercial Auto Insurance: If your business uses vehicles for operations, Delaware law requires commercial auto insurance coverage.
• Health Insurance: For businesses with 50 or more full-time employees, the federal Affordable Care Act mandates offering health insurance. Smaller employers may choose to provide health benefits as part of their hiring strategy.

Operational Tips

• Before onboarding employees, confirm your workers’ compensation policy is active and covers your business activities.
• Register with the Delaware Division of Revenue and the Division of Unemployment Insurance to handle payroll taxes and unemployment contributions properly.
• Maintain accurate records of insurance policies and employee classifications to ensure ongoing compliance during audits or inspections.
• Consider automating insurance premium payments and renewals to avoid lapses in coverage.

As of 2026, staying updated with Delaware’s insurance requirements and integrating them into your hiring and payroll processes will help maintain smooth business operations and compliance.