Connecticut small business insurance requirements: workers' compensation for one employee, 25/50/25 auto limits and home improvement registration

Connecticut: what the state requires of a small business

QUICK ANSWER

In Connecticut, any business using the services of one or more employees for pay must secure workers' compensation with an authorized insurer or as an approved self-insurer, under penalties of up to $50,000; vehicles must carry at least $25,000 per person, $50,000 per accident and $25,000 property damage liability; and home improvement contractors must register with the Department of Consumer Protection and pay into the Home Improvement Guaranty Fund before taking work.

Reviewed by CoverMatch licensed agents, Licensed property & casualty agents · Reviewed Oct 11, 2026 Updated Oct 30, 2026

Connecticut rules with sources
Topic	The rule in Connecticut	Source
Workers' compensation	An employer is any person, corporation, LLC, firm or partnership using the services of one or more employees for pay, and every employer must secure compensation through an authorized insurer or approved self-insurance. Sole proprietors are outside the definition of employee unless they accept the Act in writing; partners are covered unless the partnership elects out.	C.G.S. § 31-275(10) and § 31-284(a); Connecticut Workers' Compensation Commission
Penalty for being uninsured	Failure to insure carries a civil penalty of up to $500 per uninsured employee or $5,000, whichever is less, for each day of non-compliance, capped at $50,000, plus a stop-work order; willful failure is a Class D felony.	C.G.S. § 31-288; Connecticut Workers' Compensation Commission — Compliance
Auto liability minimums	Bodily injury $25,000 per person / $50,000 per accident and property damage $25,000, or a $75,000 combined single limit, with uninsured and underinsured motorist coverage at the same minimums.	C.G.S. § 14-112 and § 38a-336; Connecticut Department of Motor Vehicles — Insurance requirements
Home improvement contractors	Anyone performing home improvement work over $200 for a homeowner must hold a Home Improvement Contractor registration from the Department of Consumer Protection, renewed annually, and contributes to the Home Improvement Guaranty Fund; the registration number must appear in contracts and advertising.	C.G.S. § 20-420 et seq.; Connecticut Department of Consumer Protection — Home Improvement Contractor

Topic

The rule in Connecticut

Source

Workers' compensation

An employer is any person, corporation, LLC, firm or partnership using the services of one or more employees for pay, and every employer must secure compensation through an authorized insurer or approved self-insurance. Sole proprietors are outside the definition of employee unless they accept the Act in writing; partners are covered unless the partnership elects out.

C.G.S. § 31-275(10) and § 31-284(a); Connecticut Workers' Compensation Commission

Penalty for being uninsured

Failure to insure carries a civil penalty of up to $500 per uninsured employee or $5,000, whichever is less, for each day of non-compliance, capped at $50,000, plus a stop-work order; willful failure is a Class D felony.

C.G.S. § 31-288; Connecticut Workers' Compensation Commission — Compliance

Auto liability minimums

Bodily injury $25,000 per person / $50,000 per accident and property damage $25,000, or a $75,000 combined single limit, with uninsured and underinsured motorist coverage at the same minimums.

C.G.S. § 14-112 and § 38a-336; Connecticut Department of Motor Vehicles — Insurance requirements

Home improvement contractors

Anyone performing home improvement work over $200 for a homeowner must hold a Home Improvement Contractor registration from the Department of Consumer Protection, renewed annually, and contributes to the Home Improvement Guaranty Fund; the registration number must appear in contracts and advertising.

C.G.S. § 20-420 et seq.; Connecticut Department of Consumer Protection — Home Improvement Contractor

Workers' compensation in Connecticut

Connecticut has required coverage for a single employee since 1967, when the General Assembly dropped the old two-employee threshold. Part-time, seasonal and temporary workers count. Classification of independent contractors follows the Commission's right-to-control test, so calling someone a contractor does not settle it. Penalties accrue daily and the Commission can stop work until coverage is in place.

Auto liability in Connecticut

The state minimum is 25/50/25 with matching uninsured and underinsured motorist coverage, or a $75,000 combined single limit. Business vehicles in Connecticut are usually written at a $1M combined single limit because leases and client contracts require it, and because the minimum rarely covers a commercial loss.

Home improvement contractors in Connecticut

Home improvement work is registered rather than licensed. Registration is annual, funds the Guaranty Fund that pays homeowners when a contractor fails, and must be displayed on contracts and advertising. It does not include insurance, so a certificate of general liability is what customers ask for. Electrical, plumbing and heating trades are licensed separately by the same department with their own requirements.

How CoverMatch uses these rules

A Connecticut business in the wallet is checked against these rules: workers' compensation once any employee is reported, the 25/50/25 floor on scheduled vehicles, and the registration status for home improvement classes. Each rule links to its source, and a licensed agent reviews this page before it publishes and whenever the rules change.

Sources

Questions people actually ask

I run a Connecticut salon as a sole proprietor with one stylist. Do I need workers' compensation?

Yes, for the stylist, from the first day of work. You are outside the system yourself unless you file to accept the Act, which many owners do so that their own injuries are covered.

Does the Connecticut home improvement registration require insurance?

The registration itself requires the fee and Guaranty Fund contribution, not a liability policy. Homeowners, lenders and municipalities routinely ask registered contractors for a certificate of general liability anyway, and electrical, plumbing and HVAC licenses carry their own rules.

Can a Connecticut business carry one combined limit instead of split auto limits?

Yes. A $75,000 combined single limit satisfies the minimum, and most commercial auto policies are written at $1M combined because contracts require it.

By business type in Connecticut