If your Maryland LLC has even one covered employee, yes, it must carry workers compensation insurance. The twist that catches LLC owners is that Maryland treats a member who provides a service to the LLC for pay as a covered employee by default, not an exception, so a working member is usually covered the same as a hired hand. A member can opt out only if they own at least 20 percent of the LLC and file the right notice. So the question turns on whether you have any employees and whether each working member qualifies to opt out.
Who this is for: Owners of a Maryland LLC, whether a single-member LLC with no staff, a member-run LLC, or an LLC running a payroll of W-2 employees.
The short version
- An LLC must carry workers comp once it has one covered employee, with no head-count minimum.
- A member who works for the LLC for pay is a covered employee by default, unlike a sole proprietor or partner.
- A member can opt out only if they own at least 20 percent of the LLC.
- Opting out is not effective until the LLC gives written notice naming the member to both the Commission and the insurer.
- Clients and general contractors routinely require proof of coverage before your LLC can start work.
How Maryland treats LLC members
Maryland's rule for LLC members is the opposite of the rule for sole proprietors and partners. A member who provides a service to the company for money is a covered employee automatically, which means a working owner is on the policy unless they take a specific step to get off it. That step is a true election out, and it is only available to a member who owns at least 20 percent of the outstanding profits interests in the LLC. A member who owns less than 20 percent, or who simply wants off the policy, cannot opt out. And leaving an owner off the policy is not enough on its own: the exemption is only effective once the LLC delivers written notice naming that member to both the Workers' Compensation Commission and the insurer. Separate from all of this, once the LLC has any other employee, it needs a policy no matter how the members are treated.
What applies to your LLC
| Your LLC setup | Is comp required? | What owners and staff should know |
|---|---|---|
| Single-member, no employees, member takes pay | Effectively yes for the member, unless they opt out | A working member is covered by default; opt out needs 20 percent ownership plus notice |
| Single-member, no employees, no wages drawn | Often no policy needed | You may still elect coverage for your own injuries |
| Two working members, no other staff | Yes for the working members | Each is covered by default; each may opt out only with 20 percent ownership and notice |
| Any LLC with one or more employees | Yes | Employees are covered; a subcontractor's uninsured workers can become your liability |
Opting out, and when it makes sense
Because members are covered by default, the real decision for an owner-run LLC is whether to stay on the policy or opt out. Staying on means your own on-the-job injuries are paid by comp, which is often worth the premium for owners who do physical or field work. Opting out lowers the premium but leaves your own injuries to your health insurance or a separate disability policy, and it is only allowed if you own at least 20 percent and file the written notice with the Commission and the insurer. The limited liability in an LLC shields your personal assets from many business debts, but it does not by itself answer an injured employee, which is exactly what comp is built to handle. Remember that an uninsured subcontractor's injured worker can become your responsibility as the hiring contractor, so an LLC that uses subs should collect proof of coverage from each one.
A Columbia example
Illustrative, not a quote. A two-member electrical contracting LLC in Columbia runs the business with one W-2 apprentice, and both members work in the field pulling wire for pay. Maryland treats the two working members as covered employees, and the apprentice needs coverage as well, so the LLC must carry a policy. Because the members do hands-on work, they keep themselves on the policy rather than try to opt out, so all three are protected. When a builder requires proof of coverage, the LLC produces a certificate the same day, and if a member or the apprentice is hurt pulling wire, the injury is covered and the LLC keeps its legal protection. We make sure the electrical work is rated correctly so the price is fair. See our workers comp for electricians page.
Real questions Maryland owners ask
Does my Maryland LLC have to carry workers comp?
Once it has one covered employee, yes. And a member who works for the LLC for pay is a covered employee by default, so a working owner is usually on the policy unless they qualify to opt out.
Am I covered as an LLC member in Maryland?
By default, yes, if you provide a service to the LLC for money. Maryland treats a working member as a covered employee, which is the opposite of how it treats a sole proprietor or partner.
Can I opt out of covering myself as an LLC member?
Only if you own at least 20 percent of the LLC, and only after the LLC files written notice naming you with both the Commission and the insurer. A member below 20 percent cannot opt out.
Does a single-member LLC in Maryland need workers comp?
If you draw pay for working in the LLC, you are covered by default unless you opt out. If you have no other employees and take no wages, you often need no policy, though you may still elect coverage for yourself.
Do I need coverage if my LLC hires subcontractors?
Often yes. If a subcontractor is uninsured, its injured worker can become your responsibility as the hiring contractor, so you should collect proof of coverage from every sub and carry your own policy.
Is just leaving myself off the policy enough to opt out?
No. Simply omitting an owner does not work in Maryland. The opt-out is only effective once the LLC gives written notice naming the member to both the Workers' Compensation Commission and the insurer.
My LLC only has me and no staff. Do clients still ask for proof?
Often, yes. Even with no employees, general contractors and clients frequently require proof of coverage before you can start, and many will accept documentation of your exempt status instead.
Why Maryland owners choose Morrow
- We shop the right market for you. In Maryland you buy workers' comp on the open market from any private insurer licensed in the state, and Maryland also runs a competitive state fund, Chesapeake Employers' Insurance Company, that both competes for ordinary business and must cover eligible employers no one else will take, so we can shop your rate widely and still have a guaranteed fallback 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 Maryland guides
Every Maryland 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 Maryland (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)
- What workers comp does not cover
- Workers comp vs employers liability
- Maryland electrician workers comp
This guide is general information, not legal advice. Maryland rules and penalty amounts can change, so verify current requirements with the Maryland Workers' Compensation Commission or a licensed advisor before you rely on them. Last updated: July 2026.