As a Montana sole proprietor, you are outside workers compensation by default, so if you truly work alone you are not required to carry it. The moment you hire even one employee, though, Montana requires a policy for that worker, and you can add yourself by electing coverage if you want protection for your own injuries.
Who this is for: Montana sole proprietors deciding whether they need a policy, with or without employees.
The short version
- Solo means no state mandate. A sole proprietor with no employees is exempt and not required to carry comp.
- One employee changes everything. Hire anyone and Montana requires coverage for that worker (section 39-71-401).
- You can elect to cover yourself. A sole proprietor may opt in and be bound personally under a policy.
- 1099 does not settle it. Paying someone on a 1099 does not make them exempt; Montana uses a two-part contractor test.
- Contracts often require proof. General contractors and clients frequently ask for a certificate even from solo operators.
When a sole proprietor needs coverage
| Your situation | Is comp required? | Notes |
|---|---|---|
| Just you, no workers | No | You are outside coverage; you may elect in for your own protection |
| You plus one employee | Yes | The employee must be covered from day one; you can add yourself |
| You plus 1099 help | Depends | If the worker is really your employee under the state test, you owe coverage |
| Solo, but a client wants proof | Not by law | You can buy a policy and elect in to satisfy the contract |
Covering yourself, and why owners do it
Because you start outside the system, covering yourself is a choice, not a requirement. Many sole proprietors elect in anyway, because a serious job injury can wipe out a one-person business and most health plans do not pay for work injuries the way comp does. To elect in, you get added to a policy with the insurer's agreement and are bound personally, which means the policy treats your own injuries like an employee's. If you would rather not pay premium on yourself, you can stay out, but you still must cover any employee you hire.
The 1099 trap
Sole proprietors often assume that paying helpers on a 1099 keeps them out of the comp system. In Montana it does not by itself. The state uses a two-part test: a worker is an independent contractor only if they are free from your control and run an independently established business, and in practice a real contractor holds a state exemption certificate. A worker without that certificate or their own coverage is presumed your employee, and if you act as a general contractor, an uninsured sub can be treated as your worker under the statutory employer rule. Collecting a certificate from every helper is how solo owners avoid a surprise bill.
A Missoula example
Illustrative, not a quote. A Missoula landscaper runs solo for two seasons and carries no comp, which is allowed because he has no employees. When he lands a commercial account that requires proof of coverage, he buys a policy and elects to cover himself so he can hand over a certificate. The next spring he hires a seasonal crew member, and from that first hire the worker must be covered. See our workers comp for landscapers page.
Real questions Montana owners ask
Do I need workers comp as a Montana sole proprietor?
Not if you work alone; you are outside coverage by default. Once you hire even one employee, you must cover that worker.
Can I cover myself as a sole proprietor?
Yes. You can elect coverage and be bound personally under a policy, which protects you for your own on-the-job injuries.
If all my help is 1099, am I off the hook?
Not necessarily. Montana uses a two-part test, and a worker without an exemption certificate or their own coverage is presumed your employee.
Do clients require proof of coverage from a solo operator?
Often yes. General contractors and commercial clients frequently ask for a certificate even when the state does not require you to carry a policy.
What is an exemption certificate?
It is the state Independent Contractor Exemption Certificate. It lets a real independent contractor work without being treated as an employee, but it waives all workers comp benefits for the holder.
Does my health insurance cover a work injury?
Usually not the way comp does. Workers comp pays medical bills and lost wages for job injuries, which most health plans exclude.
What happens if I hire someone and skip coverage?
You risk a stop-work order and a penalty tied to the premium you avoided, and the state uninsured fund can pay a hurt worker and bill you.
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 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)
- Do sole proprietors need workers comp?
- Do I need workers comp for 1099 contractors?
- Montana landscaper 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.