Pennsylvania small business insurance requirements: workers' compensation, auto minimums and contractor rules

Pennsylvania: what the state requires of a small business

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In Pennsylvania, every employer with at least one employee must carry workers' compensation, with narrow exemptions; vehicles registered in the state must carry at least 15/30/5 liability plus first-party medical benefits; and home improvement contractors must register with the Attorney General and hold at least $50,000 of personal injury liability and $50,000 of property damage coverage. Liquor licensees are not required to carry liability insurance but are exposed under the Dram Shop Act.

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

Pennsylvania rules with sources
Topic	The rule in Pennsylvania	Source
Workers' compensation	Required of every employer with one or more employees, including part-time and family members on payroll, with limited exemptions such as certain agricultural workers, domestic servants and workers covered by federal programs. Coverage is bought from a private carrier or the State Workers' Insurance Fund, or by approved self-insurance.	PA Department of Labor & Industry — Employers' workers' compensation obligations
Penalty for being uninsured	Failure to insure is a criminal offence under Section 305 of the Workers' Compensation Act and leaves the employer directly liable for the injured worker's benefits.	Pennsylvania Workers' Compensation Act, 77 P.S. § 501
Auto liability minimums	Bodily injury $15,000 per person / $30,000 per accident and property damage $5,000, plus $5,000 of first-party medical benefits, for any vehicle registered in Pennsylvania. Commercial vehicles for hire and heavier trucks face higher requirements.	75 Pa.C.S. § 1702 (Motor Vehicle Financial Responsibility Law)
Home improvement contractors	Contractors who perform $5,000 or more of home improvement work a year must register with the Office of Attorney General and maintain at least $50,000 of personal injury liability and $50,000 of property damage insurance.	Home Improvement Consumer Protection Act, 73 P.S. § 517.4
Liquor licensees	No statutory insurance minimum for a liquor license, but licensees are liable under the Dram Shop provisions for serving visibly intoxicated persons, which is the exposure liquor liability insurance answers.	Pennsylvania Liquor Code, 47 P.S. § 4-497

Topic

The rule in Pennsylvania

Source

Workers' compensation

Required of every employer with one or more employees, including part-time and family members on payroll, with limited exemptions such as certain agricultural workers, domestic servants and workers covered by federal programs. Coverage is bought from a private carrier or the State Workers' Insurance Fund, or by approved self-insurance.

PA Department of Labor & Industry — Employers' workers' compensation obligations

Penalty for being uninsured

Failure to insure is a criminal offence under Section 305 of the Workers' Compensation Act and leaves the employer directly liable for the injured worker's benefits.

Pennsylvania Workers' Compensation Act, 77 P.S. § 501

Auto liability minimums

Bodily injury $15,000 per person / $30,000 per accident and property damage $5,000, plus $5,000 of first-party medical benefits, for any vehicle registered in Pennsylvania. Commercial vehicles for hire and heavier trucks face higher requirements.

75 Pa.C.S. § 1702 (Motor Vehicle Financial Responsibility Law)

Home improvement contractors

Contractors who perform $5,000 or more of home improvement work a year must register with the Office of Attorney General and maintain at least $50,000 of personal injury liability and $50,000 of property damage insurance.

Home Improvement Consumer Protection Act, 73 P.S. § 517.4

Liquor licensees

No statutory insurance minimum for a liquor license, but licensees are liable under the Dram Shop provisions for serving visibly intoxicated persons, which is the exposure liquor liability insurance answers.

Pennsylvania Liquor Code, 47 P.S. § 4-497

Workers' compensation in Pennsylvania

Pennsylvania's rule is simple: one employee, one policy. The Department of Labor & Industry treats part-time staff and paid family members as employees, and the exemptions are narrow. Coverage comes from a private carrier or the State Workers' Insurance Fund. An uninsured employer in Pennsylvania faces criminal penalties and pays the injured worker's benefits directly.

Auto liability in Pennsylvania

Any vehicle registered in Pennsylvania needs the Motor Vehicle Financial Responsibility Law minimums: 15/30/5 liability and $5,000 of first-party medical benefits. Business vehicles usually carry far more because contracts require it and because the minimums do not go far after a serious accident. Pennsylvania also offers the choice between full tort and limited tort on personal policies; commercial policies are rated differently.

Contractors in Pennsylvania

The Home Improvement Consumer Protection Act requires contractors doing residential home improvement work above the threshold to register with the Attorney General and to carry liability insurance at the stated minimums. The registration number must appear on contracts and advertising. Commercial-only contractors are not covered by the Act but face the same liability requirements from general contractors and property owners.

How CoverMatch uses these rules

When a Pennsylvania business adds a policy or asks for quotes, the wallet checks these requirements against what it holds: workers' compensation once employees are reported, auto limits on scheduled vehicles, and contractor registration insurance for home improvement classes. Each rule above links to its source; a licensed agent reviews this page and updates the review date when the rules change.

Sources

Questions people actually ask

I am a sole proprietor in Pennsylvania with no employees. Do I need workers' compensation?

Not by statute, but general contractors and clients frequently require a policy or a certificate anyway, and the moment you hire anyone the requirement applies.

Can an officer of my Pennsylvania corporation be excluded?

Executive officers of a corporation and members of an LLC may elect exclusion under Section 104 of the Act with a filed waiver; speak with a licensed agent before relying on it.

Does Pennsylvania require a certificate of insurance for a business license?

Not statewide. Municipalities and specific trades (for example home improvement registration) have their own requirements; check the municipality page or your permit.

By business type in Pennsylvania