Mandatory Statutory Coverage

Workers' Compensation: The Statutory Grand Bargain

Workers' Compensation is a statutory line of insurance governed by state law rather than federal mandate. It represents a "Grand Bargain" between labor and capital: employees relinquish their right to sue employers for negligence in civil court in exchange for guaranteed, no-fault benefits for work-related injuries and illnesses.

State-Specific Thresholds

The requirement to carry Workers' Comp is not uniform across the United States. It depends heavily on the state of domicile and the number of employees.

State	Employee Threshold	Notes
California	1 Employee	Includes nearly all workers; heavy penalties for non-compliance.
Colorado	1 Employee	Strict enforcement.
Florida	4 Employees	Construction industry requires coverage for 1 employee.
Illinois	1 Employee	Corporate officers may opt-out in some cases.
Texas	Elective	The only state where most private employers can "opt-out" (become Non-Subscribers).

Cost Calculation Mechanics

Premiums are calculated using a precise actuarial formula that rewards safety and penalizes frequency of injury:

• Classification Codes: Jobs are assigned codes based on risk. A clerical worker might have a rate of $0.15 per $100 of payroll, while a roofer might be $15.00.
• Experience Modification Factor (Mod): A metric comparing a specific business's claims history to the industry average. A Mod of 0.80 implies a safety record better than average (20% discount).

Commercial Automobile Liability

Commercial Auto insurance is distinct from Personal Auto policies, which generally exclude coverage for vehicles used for business purposes. As the gig economy expands, this distinction has become a critical area of coverage gaps.

State Minimums vs. Reality

Every state sets minimum liability limits. However, relying on these minimums is considered a severe risk management error due to rising medical costs and litigation settlements.

State	Minimum Requirements	Notes
California	15/30/5	Intrastate trucks have much higher limits.
Connecticut	25/50/25	Passenger vehicles >8 passengers require $1.5M.
Illinois	25/50/20	Passenger transport ranges from $1M to $3M.