What insurance is required when hiring workers?

Required Insurance When Hiring Employees in Arizona

When hiring employees in Arizona, businesses must secure specific types of insurance to comply with state regulations and protect their operations.

Workers' Compensation Insurance

Workers' compensation insurance is mandatory for most employers in Arizona. This insurance covers medical expenses and lost wages if an employee is injured or becomes ill due to work-related activities.

• Applies to businesses with one or more employees, including part-time workers.
• Must be maintained continuously once employees are hired.
• Helps manage risk and ensures compliance with state reporting and recordkeeping requirements.

Unemployment Insurance

Arizona employers are required to pay into the state unemployment insurance program. While this is not an insurance policy a business purchases directly, it is a mandatory payroll tax that funds unemployment benefits for eligible former employees.

• Employers must register with the Arizona Department of Economic Security (DES) to report wages and pay unemployment taxes.
• Proper payroll setup and reporting automation help maintain compliance.

Additional Insurance Considerations

Beyond mandatory coverage, businesses should evaluate other insurance types to protect their operations and workforce:

• Employer Liability Insurance often comes bundled with workers' compensation to cover legal costs if an employee sues over a workplace injury.
• General Liability Insurance protects against third-party claims unrelated to employee injuries.
• Health Insurance may be required under federal laws depending on business size and employee count.

Operational Tips

• Ensure timely registration with the Arizona Industrial Commission for workers' compensation.
• Set up payroll systems to accurately withhold and report unemployment insurance taxes.
• Maintain detailed records of insurance policies, claims, and employee classifications.
• Review insurance coverage annually to align with workforce changes and compliance updates.