Kentucky small business insurance requirements: workers' compensation for one employee, 25/50/25 auto limits and $10,000 PIP

Kentucky: what the state requires of a small business

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In Kentucky, any employer with one or more employees must carry workers' compensation with an authorized carrier or as an approved self-insurer, the only broad exception being employers engaged solely in agriculture; every registered vehicle must carry at least $25,000 per person, $50,000 per accident and $25,000 property damage liability, or a $60,000 combined single limit, plus $10,000 of personal injury protection unless the no-fault benefits are rejected in writing.

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

Kentucky rules with sources
Topic	The rule in Kentucky	Source
Workers' compensation	Every employer with one or more employees, other than one engaged solely in agriculture, must secure workers' compensation with an authorized insurer or as a self-insurer approved by the Department of Workers' Claims; part-time, temporary and family employees count, and coverage must be in force before the first day of work. Sole proprietors, qualified partners and qualified LLC members are outside unless they elect in.	KRS 342.630 and KRS 342.340; Kentucky Department of Workers' Claims — Employer FAQs
Penalty for being uninsured	The Commissioner must impose a fine of not less than $100 and not more than $1,000 for each violation of the coverage requirement, and an uninsured employer is liable for the injured worker's benefits through the Uninsured Employers' Fund, which recovers from the employer.	KRS 342.990 and KRS 342.760; Kentucky Department of Workers' Claims — Employer FAQs
Auto liability minimums	Bodily injury $25,000 per person / $50,000 per accident and property damage $25,000, or a $60,000 combined single limit, on every registered vehicle.	KRS 304.39-110; Kentucky Department of Insurance — Auto insurance
Personal injury protection	Kentucky is a choice no-fault state: every policy carries basic personal injury protection of $10,000 per person unless each household member rejects it in writing, in which case guest PIP for passengers and pedestrians still applies.	KRS 304.39-020 and 304.39-060; Kentucky Department of Insurance — Auto insurance

Topic

The rule in Kentucky

Source

Workers' compensation

Every employer with one or more employees, other than one engaged solely in agriculture, must secure workers' compensation with an authorized insurer or as a self-insurer approved by the Department of Workers' Claims; part-time, temporary and family employees count, and coverage must be in force before the first day of work. Sole proprietors, qualified partners and qualified LLC members are outside unless they elect in.

KRS 342.630 and KRS 342.340; Kentucky Department of Workers' Claims — Employer FAQs

Penalty for being uninsured

The Commissioner must impose a fine of not less than $100 and not more than $1,000 for each violation of the coverage requirement, and an uninsured employer is liable for the injured worker's benefits through the Uninsured Employers' Fund, which recovers from the employer.

KRS 342.990 and KRS 342.760; Kentucky Department of Workers' Claims — Employer FAQs

Auto liability minimums

Bodily injury $25,000 per person / $50,000 per accident and property damage $25,000, or a $60,000 combined single limit, on every registered vehicle.

KRS 304.39-110; Kentucky Department of Insurance — Auto insurance

Personal injury protection

Kentucky is a choice no-fault state: every policy carries basic personal injury protection of $10,000 per person unless each household member rejects it in writing, in which case guest PIP for passengers and pedestrians still applies.

KRS 304.39-020 and 304.39-060; Kentucky Department of Insurance — Auto insurance

Workers' compensation in Kentucky

Kentucky requires coverage from the first employee unless the employer is engaged solely in agriculture. Part-time, temporary and family workers count, and the Department of Workers' Claims expects the policy to be in force before work starts. Owners of unincorporated businesses and qualified LLC members are outside the system unless they elect in. Fines run per violation and the Uninsured Employers' Fund pays injured workers, then recovers from the employer.

Auto liability in Kentucky

Kentucky's minimum is 25/50/25 or a $60,000 combined single limit, with $10,000 of basic personal injury protection unless rejected in writing. Business vehicles are usually written at a $1M combined single limit because leases, platforms and contracts demand it, with PIP attached.

Licensing in Kentucky

Kentucky licenses electricians, plumbers and HVAC contractors through the Department of Housing, Buildings and Construction and requires general liability of licensed electrical and HVAC contractors; general and residential contractors are licensed by cities and counties rather than the state. Keep a general liability certificate current because permitting offices ask for it everywhere.

How CoverMatch uses these rules

A Kentucky business in the wallet is checked against these rules: workers' compensation as soon as a non-agricultural employee is reported, liability and PIP on scheduled vehicles, and the license and liability evidence for licensed trades. 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

Does a Kentucky farm stand that also runs a café need workers' compensation?

The agricultural exemption covers employers engaged solely in agriculture. Once the business also runs a café, retail or events with employees, it is no longer solely agricultural and coverage is required for those workers.

Can a Kentucky LLC's members be left off the policy?

Qualified members are outside coverage by default and can elect in. Employees who are not members are always covered, and clients and general contractors often require members to be covered too.

What does rejecting PIP mean for a business vehicle?

Rejection is a household election on personal policies; commercial auto policies for Kentucky businesses generally carry PIP and are written at a $1M combined single limit for liability, which is what contracts require.

By business type in Kentucky