Most Vermont businesses need workers compensation the moment they have employees, general liability that clients and landlords insist on, and property or a package policy for their equipment. Workers comp is the coverage Vermont law actually forces on you: under Title 21 of the Vermont statutes there is no minimum headcount and no exception for part-time, seasonal, or family staff, so one employee triggers the duty.
Who this is for: Vermont owners, from a one-van contractor in Burlington to a 20-person shop in Rutland, who want to know what the state requires, what their contracts require, and how to buy it without overpaying.
The short version
- Workers comp is required once you have employees. Vermont sets no minimum headcount and no part-time exception, so one full-time or part-time employee makes a policy mandatory under 21 V.S.A. 687.
- Owners are treated differently depending on your setup. A sole proprietor or partner is left out by default and can elect to cover themselves, while a corporation's officers and an LLC's members are covered by default and can elect to exclude up to four of them.
- General liability is not a state mandate, but nearly every lease, client contract, and general contractor requires it before you can start work.
- Skipping required coverage is costly. Vermont can fine you by the day, order your business to stop work until you insure, and pursue civil or criminal penalties.
- You buy on the open market. Vermont has no state fund, so private carriers compete for your business, with an assigned risk plan as the backstop if you are hard to place.
What Vermont actually requires
Only a couple of these are true legal mandates. The rest get required by the people you do business with, which in practice is just as binding.
| Coverage | Required by Vermont law? | Who needs it | What is at stake |
|---|---|---|---|
| Workers compensation | Yes, 21 V.S.A. 687, once you have employees | Every employer with one or more employees | Daily fines, a stop-work order, civil and criminal penalties |
| Commercial auto | Yes, if you own or use business vehicles | Any business-owned or leased vehicle | Registration problems, uninsured liability |
| General liability | No state mandate | Required by most leases, clients, and general contractors | Lost contracts, blocked from a job site |
| Professional liability (errors and omissions) | No state mandate | Consultants, tech, design, and accounting firms, often by contract | Uncovered claims, lost contracts |
| Commercial property or a package policy | No state mandate | Anyone with a space, inventory, or equipment; landlords often require it | Out-of-pocket losses, lease default |
What business insurance costs in Vermont
These are illustrative annual ranges for small Vermont businesses, not quotes. Your real price depends on payroll, revenue, claims history, and the exact kind of work. Vermont workers comp prices have been trending down: the state approved a 7.4 percent cut in voluntary loss costs and an 11.3 percent cut in assigned risk rates effective April 1, 2025, and the April 1, 2026 filing continued the downward trend. The Department of Financial Regulation, not the Department of Labor, approves these rate filings.
| Business type | Workers comp (est.) | General liability (est.) | Package policy (est.) |
|---|---|---|---|
| Office or professional services | 500 to 2,300 dollars | 500 to 1,900 dollars | 1,100 to 3,600 dollars |
| Restaurant or cafe | 2,400 to 9,500 dollars | 1,400 to 5,000 dollars | 4,000 to 14,000 dollars |
| Landscaper or small contractor | 3,200 to 13,000 dollars | 1,100 to 4,000 dollars | Usually separate policies |
| Cleaning or janitorial | 2,800 to 10,500 dollars | 800 to 3,200 dollars | Usually separate policies |
| Retail store | 1,100 to 4,800 dollars | 800 to 3,000 dollars | 2,200 to 8,000 dollars |
The 14 workers comp questions Vermont owners ask
Workers comp is where most of the confusion and most of the risk live, so we wrote a plain-English guide for every common situation. Start with the Vermont workers comp overview, then jump to the one that matches your business:
- I own an LLC
- I am a sole proprietor
- I own a corporation (C-corp or S-corp)
- We are a partnership
- We are a nonprofit
- My workers are 1099 contractors
- I only have part-time or seasonal staff
- I only employ family members
- My team is remote or out of state
- What happens if I do not have it
- How much it costs
- How to get it, even if I have been turned down
- What I need for a contractor license
A Burlington example
Illustrative, not a quote. A four-person general contractor in Burlington runs the business as an LLC with two members and two field employees. Because the LLC has non-owner employees, Vermont requires a policy, and the two field employees must be covered from their first day. In Vermont an LLC's members are covered by default, but the LLC may elect to exclude up to four of them by filing Form 29 with the Department of Labor and getting its approval, so a member who wants to stay off the policy can, while every employee stays covered. When a builder they want to work for requires proof of coverage, the LLC already has a policy and can produce a certificate the same day. See the trade detail on our workers comp for contractors page.
Real questions Vermont owners ask
Do I need workers comp for my Vermont business?
If you have any employees, yes. Vermont requires coverage once you have one or more employees under 21 V.S.A. 687, with no minimum headcount and no exception for part-time or seasonal staff.
I just hired my first employee in Vermont. Do I need it right away?
Yes. Vermont requires workers comp as soon as you have even one employee, full or part time, with no waiting period and no minimum headcount. Put a policy in place before that person starts work.
Do I have to cover myself as the owner?
It depends on your setup. A sole proprietor or partner is left out by default and may elect to cover themselves. A corporation's officers and an LLC's members are covered by default, but up to four of them may be excluded by filing Form 29 with the Department of Labor.
Is general liability insurance required in Vermont?
The state does not make general liability mandatory for most businesses, but landlords, clients, and general contractors almost always require it before they will sign with you, so in practice you usually need it.
What happens if I skip workers comp?
Vermont can fine you up to 100 dollars per day for the first week and up to 150 dollars per day after that, order your business to stop work until you insure, and pursue civil or criminal penalties.
Does Vermont have a state workers comp fund?
No. Vermont has no state fund. You buy from private carriers on the open market, and if no carrier will take you, the assigned risk plan run by the rating bureau NCCI is the guaranteed backstop.
I am based out of state with a worker in Vermont. Do I need coverage here?
Generally yes. With an employee working in Vermont you usually need Vermont coverage for them, no matter where your company is based. We can add Vermont to your policy or write a separate one.
Why Vermont owners choose Morrow
- We shop the right market for you. In Vermont you buy workers' comp on the open market from any private carrier licensed in the state, because there is no state fund, and if no carrier will take you the NCCI-run Vermont Workers' Compensation Insurance Plan (the assigned risk pool) is the guaranteed fallback, so we can shop your rate freely and still have 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 Vermont guides
Every Vermont 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 Vermont (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?
- 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)
- Hiring your first employee: what changes
- What workers comp does not cover
- Vermont contractor workers comp
This guide is general information, not legal advice. Vermont rules and penalty amounts can change, so verify current requirements with Vermont Department of Labor, Workers' Compensation and Safety Division or a licensed advisor before you rely on them. Last updated: July 2026.