If your Iowa LLC has any employees, you need workers' compensation for them from the first hire. The members themselves are different: Iowa does not treat an LLC member as an employee, so members are off the policy by default and are added only if they choose to elect coverage.
Who this is for: owners of an Iowa LLC who want to know whether the business needs workers' comp and whether the members are covered.
The short version
- Employees of the LLC must be covered from the first one, under Iowa Code section 87.1.
- LLC members are not counted as employees in Iowa, so they are off the policy by default.
- A member who wants coverage elects in by buying a policy that specifically names that member.
- A member who does not elect must file a written nonelection form with the state, witnessed by two people who are not involved.
- A member-only LLC with no employees has no one it is required to cover, until it hires.
Members versus employees
Iowa law lists an LLC member, along with sole proprietors and partners, as a person who is not a worker or employee unless they elect coverage. That means the requirement to insure turns on your non-member staff, not on the members. If you hire a shop manager, a driver, or a laborer, those employees must be covered. The members can choose to be on the policy or stay off it.
| Person in the LLC | On the policy by default? | How to change it |
|---|---|---|
| LLC member active in the business | No, off by default | Elect in by buying coverage that names the member |
| LLC member who wants to stay off | No | Must file a written nonelection form with the state, witnessed by two disinterested people |
| A regular employee (non-member) | Yes, must be covered | Cannot be waived out; coverage is required |
Why members often elect in anyway
Being off the policy saves a little premium, but it also means a member who is hurt on the job has no workers' comp wage replacement or medical coverage for that injury, and a personal health plan may not treat a work injury the same way. Many working members elect in so they are protected on the job like their crew. If you do want to stay off, you are required to put the nonelection on file, and a rejection or nonelection cannot be forced on anyone as a condition of employment.
A Davenport example
Illustrative, not a quote. A Davenport remodeling LLC has two members who both swing hammers and one hired laborer. The laborer must be covered from day one. The two members are off the policy by default, and after thinking about their own injury risk on the job, they elect in so the policy also names them. When a general contractor asks for proof of coverage before letting them on site, the LLC produces a certificate that day. See our workers comp for contractors page for the trade detail.
Real questions Iowa owners ask
Does my Iowa LLC need workers' comp?
Yes, once it has employees. Any non-member employee must be covered from the first hire. If the LLC has only members and no employees, it has no one it is required to cover.
Are LLC members covered automatically in Iowa?
No. Iowa does not treat an LLC member as an employee, so members are off the policy by default. A member is covered only if they elect in by buying a policy that names them.
How does an LLC member get workers' comp coverage?
By electing in. The member buys workers' comp that specifically includes that person. Being actively engaged in the business on a substantially full-time basis is what lets a member elect.
What if a member does not want coverage?
The member can stay off the policy but must file a written nonelection form with the state, witnessed by two people who are not involved in the business. The state keeps a public list of these filings.
Can I keep my one employee off the policy to save money?
No. A regular non-member employee must be covered and cannot be waived out. Only the members themselves have the choice to be on or off.
Does electing myself in cost much?
It adds your own payroll to the basis the premium is figured on, so it raises the price somewhat, but it also means a work injury to you is covered. We can price it both ways so you can compare.
Why Iowa owners choose Morrow
- We shop the right market for you. In Iowa you buy workers' comp on the open market from any private carrier approved by the Iowa Insurance Commissioner, because Iowa has no state fund; if no carrier will take you, the state's plan of last resort is the guaranteed fallback, so we can shop your rate freely and still keep a backstop for hard-to-place work.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Iowa guides
Every Iowa business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Iowa (start here)
- Workers comp: the owner's overview
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How much does workers comp cost?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Workers compensation insurance, explained
- Hiring your first employee: what changes
- Iowa contractor workers comp
This guide is general information, not legal advice. Iowa rules and penalty amounts can change, so verify current requirements with the Iowa Division of Workers' Compensation or a licensed advisor before you rely on them. Last updated: July 2026.