If a Montana business that is required to carry workers compensation goes without it, the state can order it to stop operating and assess a penalty tied to the premium it skipped. On top of that, an uninsured employer loses key courtroom defenses if a worker sues, and the state's uninsured fund can pay the injured worker and then come after the employer for every dollar.
Who this is for: Montana owners weighing the real cost of skipping required coverage, or catching up after a lapse.
The short version
- The penalty is tied to skipped premium. Montana can assess up to double the State Fund premium you avoided, or $200, whichever is greater (section 39-71-504).
- The state can stop your business. Montana can order an uninsured employer to cease operations until it gets covered (section 39-71-507).
- Ignoring a stop order is a crime. Each day of violation is a separate misdemeanor.
- An uninsured injury is on you. The uninsured fund pays the worker, then bills you for the benefits plus penalties.
- You lose your defenses. A hurt worker can sue an uninsured employer, who cannot argue the worker assumed the risk or was careless (section 39-71-515).
What the penalties look like
Montana stacks several consequences on the same lapse: a premium-based penalty, added charges, the stop-work power, and lost defenses can all attach at once.
| Consequence | Amount or effect | Source |
|---|---|---|
| Premium penalty | Up to double the State Fund premium you avoided, or $200, whichever is greater | section 39-71-504 |
| Failure to insure within 30 days of notice | An additional $200 | section 39-71-504 |
| Late payment fees | $50 per missed payment, plus interest of 12 percent a year | section 39-71-504 |
| Stop-work order | The state can order you to cease operations until covered | section 39-71-507 |
| Violating the stop order | Misdemeanor; each day is a separate offense | section 39-71-507 |
| Uninsured injury | The uninsured fund pays the worker, then recovers the benefits plus penalties from you | Uninsured Employers' Fund provisions, sections 39-71-504 and 39-71-506 |
| Lost defenses in a lawsuit | No assumption of risk, contributory negligence, or fellow-servant defense | section 39-71-515 |
How the stop-work power works
The state does not have to wait for an injury to act. On finding an uninsured employer, it can order the business to stop operating until it enrolls in a plan, and continuing to operate in violation is a misdemeanor for each day it happens. The reach extends to job sites: the state can order a prime contractor to stop an uninsured subcontractor's work, and if the prime does not comply within three business days, the order can expand to all operations at the site, with a civil penalty of up to $1,000 a day and misdemeanor exposure for the prime. That is why general contractors insist on proof of coverage before letting a sub start.
Getting hurt while uninsured
The fines are only part of it. Montana runs an uninsured employers' fund that pays benefits to a worker hurt while their employer was illegally uninsured, then pursues the employer for reimbursement plus the penalties. Separately, the injured worker has an independent right to sue the uninsured employer for damages, and in that suit the employer cannot use the usual defenses: it cannot argue the worker assumed the risk, was contributorily negligent, or was hurt by a co-worker. A complying employer, by contrast, is generally shielded from being sued for a workplace injury at all. A single serious injury can dwarf years of premium.
A Great Falls example
Illustrative, not a quote. A Great Falls roofing company with a five-person crew skips coverage to save money and runs uninsured for four months. The state learns of it and can order the company to stop work until it gets a policy and assess a penalty of up to double the State Fund premium it avoided. When a roofer then falls and is badly hurt, the uninsured fund can pay his benefits and bill the company, which also cannot use its usual defenses if he sues. A policy would have cost a fraction of that. See our workers comp for roofers page.
Real questions Montana owners ask
What happens if I do not carry workers comp in Montana?
The state can order you to stop operating and assess a penalty of up to double the state fund premium you avoided, or $200, whichever is greater.
Can Montana shut my business down?
Yes. The state can order an uninsured employer to cease operations until it gets covered, under section 39-71-507.
Is ignoring a stop-work order a crime?
Yes. Violating a cease order is a misdemeanor, and each day of violation is a separate offense.
Who pays if a worker is hurt while I am uninsured?
The state uninsured fund can pay the worker, then recover the benefits from you, plus the penalties.
Can a hurt worker sue me directly?
Yes. An injured worker can sue an uninsured employer, who cannot use defenses like assumption of risk or the worker's own carelessness.
What can a general contractor face for an uninsured sub?
A prime contractor can be ordered to stop the sub's work, and if it does not act within three business days, it can face a civil penalty of up to $1,000 a day.
Can I deduct the premium from my workers' pay?
No. Charging any part of the workers comp premium to an employee is a separate misdemeanor in Montana.
Why Montana owners choose Morrow
- We shop the right market for you. In Montana you buy workers' comp on the open market, where private insurers compete with the state-chartered Montana State Fund, which by law must insure almost any Montana employer that asks, so we can shop your rate across carriers and still keep the State Fund as a guaranteed 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 Montana guides
Every Montana 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 Montana (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- 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?
- 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 comp vs employers liability
- What workers comp does not cover
- Montana roofer workers comp
This guide is general information, not legal advice. Montana rules and penalty amounts can change, so verify current requirements with the Montana Department of Labor and Industry, Employment Relations Division or a licensed advisor before you rely on them. Last updated: July 2026.