Kansas small business insurance requirements: the $20,000 payroll test for workers' compensation, 25/50/25 auto limits and no-fault PIP

Kansas: what the state requires of a small business

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In Kansas, an employer is subject to the Workers Compensation Act once its gross annual payroll was more than $20,000 in the prior year or is reasonably expected to pass $20,000 this year, excluding wages paid to family members, with agricultural employers exempt; every registered vehicle must carry at least $25,000 per person, $50,000 per accident and $25,000 property damage liability, plus personal injury protection and uninsured motorist coverage of 25/50.

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

Kansas rules with sources
Topic	The rule in Kansas	Source
Workers' compensation	An employer is covered by the Act unless its gross annual payroll was $20,000 or less in the preceding calendar year and it reasonably expects payroll to stay at or below $20,000 this year; wages paid to relatives by blood or marriage are not counted. A new business with no prior payroll is judged on its reasonable expectation for the current year.	K.S.A. 44-505(a)(2) and (a)(3); Kansas Department of Labor — Workers Compensation for employers
Agricultural and other exemptions	Agricultural pursuits are outside the Act regardless of payroll, as are certain realty sales agents and firefighters' relief associations; non-wage compensation such as rent or use of a vehicle has been counted toward the payroll test in disputed cases.	K.S.A. 44-505(a)(1); Kansas Department of Labor — Division of Workers Compensation
Auto liability minimums	Bodily injury $25,000 per person / $50,000 per accident and property damage $25,000 on every registered vehicle.	K.S.A. 40-3107(e); Kansas Insurance Department — Auto insurance requirements
Personal injury protection and uninsured motorist coverage	Kansas is a no-fault state: every auto policy must include personal injury protection with at least $4,500 of medical benefits per person plus disability, rehabilitation, funeral and survivor benefits, and uninsured and underinsured motorist coverage of at least 25/50.	K.S.A. 40-3107(f) and 40-284; Kansas Insurance Department — Auto insurance requirements

Topic

The rule in Kansas

Source

Workers' compensation

An employer is covered by the Act unless its gross annual payroll was $20,000 or less in the preceding calendar year and it reasonably expects payroll to stay at or below $20,000 this year; wages paid to relatives by blood or marriage are not counted. A new business with no prior payroll is judged on its reasonable expectation for the current year.

K.S.A. 44-505(a)(2) and (a)(3); Kansas Department of Labor — Workers Compensation for employers

Agricultural and other exemptions

Agricultural pursuits are outside the Act regardless of payroll, as are certain realty sales agents and firefighters' relief associations; non-wage compensation such as rent or use of a vehicle has been counted toward the payroll test in disputed cases.

K.S.A. 44-505(a)(1); Kansas Department of Labor — Division of Workers Compensation

Auto liability minimums

Bodily injury $25,000 per person / $50,000 per accident and property damage $25,000 on every registered vehicle.

K.S.A. 40-3107(e); Kansas Insurance Department — Auto insurance requirements

Personal injury protection and uninsured motorist coverage

Kansas is a no-fault state: every auto policy must include personal injury protection with at least $4,500 of medical benefits per person plus disability, rehabilitation, funeral and survivor benefits, and uninsured and underinsured motorist coverage of at least 25/50.

K.S.A. 40-3107(f) and 40-284; Kansas Insurance Department — Auto insurance requirements

Workers' compensation in Kansas

Kansas sets its threshold by payroll rather than headcount: $20,000 of gross annual wages, judged on the prior year and the reasonable expectation for the current year, with family wages excluded and agriculture exempt. The Kansas appellate courts have looked hard at what "reasonable expectation" means for a business that opens mid-year and have counted rent, vehicle use and cash payments toward the total. A business near the line is safer insured.

Auto liability in Kansas

Kansas requires 25/50/25 liability plus the no-fault package: personal injury protection with medical, disability, rehabilitation, funeral and survivor benefits, and uninsured and underinsured motorist coverage of 25/50. Business vehicles are normally written at a $1M combined single limit on top of the mandatory coverages.

Licensing in Kansas

Kansas has no state-wide contractor license; cities and counties license and bond trades locally, and the state licenses specific professions through boards. Permitting offices and general contractors ask for a general liability certificate at each job, so keep one current even where no license applies.

How CoverMatch uses these rules

A Kansas business in the wallet is checked against these rules: workers' compensation once reported payroll approaches $20,000, liability and PIP on scheduled vehicles, and the local bond and liability evidence that permitting offices ask for. 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

My Kansas shop's annual payroll for two part-time employees is about $18,000. Is workers' compensation required?

Not by the statute while payroll stays at or below $20,000, but the moment you expect to pass it, the Act applies, and most customers and landlords ask for a policy anyway. Family wages do not count toward the test.

Does the $20,000 test count what I pay myself?

Payroll means wages paid to employees. Owners' draws are not wages, but a corporate officer on salary is an employee for the test unless properly excluded.

Is PIP really required on a Kansas work truck?

Yes. Every Kansas auto policy carries personal injury protection and uninsured motorist coverage. Commercial policies also carry it, usually alongside a $1M combined single limit for liability.

By business type in Kansas