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Kentucky business insurance: requirements and costs

Kentucky requires workers' comp from the first employee in any non-farm business, with no minimum headcount and no construction carve-out.⁠1 A competitive state fund, Kentucky Employers' Mutual Insurance (KEMI), sells coverage next to private insurers and is the insurer of last resort.⁠4 Employer cost is low by national measures: NASI puts it at $0.73 per $100 of covered wages in 2023, against $0.98 nationally.⁠8

Checked against 10 sources Last reviewed How we check figures

Kentucky at a glance

Workers’ comp required1+ employees; agriculture-only employers exempt
Where employers buy itPrivate insurers and a competitive state fund (Kentucky Employers' Mutual Insurance (KEMI))
Rates set byNational Council on Compensation Insurance
Employer comp cost, 2023$0.73 per $100 of covered wages (US $0.98)
Comp rate index, 2024$0.76, ranked 41 of 51 (1 = most expensive)
Employer health premium, 2025$8,936 single, $24,520 family (average total premium)
Auto liability minimum25/50/25

Kentucky's comp system rests on KRS Chapter 342. Every employer with one or more employees subject to the chapter must carry coverage, and farms that employ only agricultural workers are outside the mandate; agricultural employees are exempt by statute.⁠1⁠2 An employer meets the duty in one of two ways. It either insures its liability with an insurer authorized to write comp in Kentucky, or it proves to the commissioner that it can pay claims directly and posts security, indemnity or a bond.⁠3 Insurers or self-insured groups must also file proof of coverage for the employer with the Department of Workers' Claims within ten days after a policy or endorsement is issued.⁠3 The state fund is a nonprofit, self-supporting public body that must act as an insurer in the voluntary market and as an insurer of last resort, so an employer that private carriers decline still has a place to buy.⁠4

The exemptions are narrower than many owners assume. Statute exempts domestic servants in a private home only where the employer has fewer than two such workers working 40 or more hours a week, and short maintenance or remodeling jobs for a private home of 20 consecutive work days or less.⁠2 It also exempts ministers working 10 hours a week or less or without a fixed regular payment, direct sellers under IRC section 3508(b)(2), and members of qualifying religious sects. A person otherwise covered may elect out under the commissioner's regulations.⁠2 Do not treat the election as a loophole for staff: the penalty for an uninsured employer is set per employee and per day. Each employee and each day of violation is a separate offense, with a civil fine of $100 to $1,000 per offense.⁠5 A knowing violation can also be a crime, with a fine of $100 to $1,000, 30 to 180 days in jail, or both, per offense. Owners, partners, LLC principals and corporate officers who knowingly authorized the violation are personally liable.⁠5 By our calculation, an employer with 5 uninsured employees for 10 days is 50 employee-days. The statute's minimum alone then yields $5,000 and the maximum $50,000, if each employee-day is charged as one offense.

Costs sit well under the national picture. NASI estimates employers' comp cost in Kentucky fell from $0.94 per $100 of covered wages in 2019 to $0.73 in 2023, a 22% drop by our calculation, against a 16% drop nationally (from $1.17 to $0.98).⁠8 Oregon's 2024 study ranked Kentucky's manual rates 41st most expensive of 51 jurisdictions, at an index of $0.76 per $100 of payroll, 70% of the median state, Georgia at $1.09.⁠9 Health costs run the other way for small employers. Under AHRQ's 2025 survey, 29.7% of Kentucky private-sector establishments in firms with under 50 employees offered health insurance, against 32.1% nationally. Where offered, the small-firm average single premium was $9,644, about 7% above the $9,034 national figure by our calculation.⁠10

Workers’ compensation in Kentucky

Any non-farm employer with one or more employees subject to KRS Chapter 342 must carry comp, as must the state and local governments.⁠1 Employers engaged solely in agriculture are not mandated, and agricultural employees are exempt.⁠1⁠2

Who is exempt

  • Persons employed in agriculture; employers solely in agriculture are not mandatorily covered
  • Domestic servants in a private home where the employer has fewer than 2 such employees working 40+ hours a week
  • Maintenance, repair or remodeling work of up to 20 consecutive work days at the employer's private home (or at business premises if the employer has no other covered employees)
  • Persons working only for aid or sustenance from a religious or charitable organization
  • Persons covered by a federal liability law, except Black Lung coverage
  • Persons who elect not to be covered under the commissioner's regulations
  • Voluntary carpool or vanpool riders and drivers commuting to work
  • Members of qualifying religious sects opposed to insurance
  • Ministers with no fixed regular payment or working 10 hours a week or less; church cemetery or property caretakers working 10 hours a week or less
  • Direct sellers under IRC section 3508(b)(2)
  • Certain behavior-support and respite providers under a certified 1915(c) waiver provider

Buying coverage and who sets the rates

Employers buy from a private insurer authorized in Kentucky or from KEMI, the competitive state fund, which is also the insurer of last resort. Employers can instead self-insure by giving the commissioner proof of financial ability and security.⁠3⁠4

Individual self-insurers must furnish proof of financial ability and deposit security under KRS 342.340(1)(b).⁠3

Penalties for going without

Civil fine of $100 to $1,000 per offense, where each employee and each day without coverage is a separate offense. Criminal fine of $100 to $1,000, 30 to 180 days in jail, or both, per offense; owners, partners, LLC principals and corporate officers who knowingly authorized the violation are personally liable.⁠5

What Kentucky employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearKentuckyUnited States
2019$0.94$1.17
2020$0.82$1.08
2021$0.78$1.01
2022$0.78$1.00
2023$0.73$0.98

Employer cost per $100 of covered wages: premiums paid by insured employers plus benefits and administrative costs of self-insured employers, divided by the wages of workers covered by workers’ compensation. The United States figure is NASI’s national total, which includes federal programs. Source: National Academy of Social Insurance (NASI), published 11 Aug 2026.

Oregon’s biennial comparison of workers’ comp rates puts Kentucky’s index for rates in effect on 1 January 2024 at $0.76 per $100 of payroll, 30% below the national median of $1.09 (rank 41 of 51, where 1 is the most expensive). The index prices the same 50 risk classes, weighted by Oregon payroll, in every state, so it compares rate levels rather than what employers actually pay. Compare every state.

Employer health insurance in Kentucky

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureKentuckyFirms under 50United States
Single coverage, total premium$8,936$9,644$9,025
Family coverage, total premium$24,520$20,839$26,281
Employee share, single$1,947–$1,817
Employers offering coverage52.5%29.7%49.2%

Average total annual premium per enrolled employee at private-sector establishments that offer health insurance; the offer rate is the share of establishments offering coverage. Small firms have fewer than 50 employees. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Financing, Access and Cost Trends, 2025 survey year. All states.

Commercial auto in Kentucky

Every vehicle registered in Kentucky, including business vehicles, must carry at least 25/50/25 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

Split limits of $25,000 per person and $50,000 per accident for bodily injury plus $25,000 property damage, or a single limit of $60,000 per accident. Kentucky is a no-fault state: basic reparation benefits (PIP) are also required, up to $10,000 per person per accident, and motorcycles need only the liability coverages. The statute's current text is effective June 29, 2017; its property-damage minimum of $25,000 applies to policies issued or renewed on or after January 1, 2018, and the text shows no later change.⁠6⁠7

Trucks and buses used in interstate commerce must also meet federal minimums of $750,000 to $5 million: see commercial auto minimums and what commercial auto costs.

Other Kentucky rules that affect insurance costs

Corporate officers and LLC members face personal liability

If an uninsured employer is a corporation, partnership, LLC or sole proprietorship, the owner, partner, principal or corporate officer who knowingly authorized, ordered or carried out the violation is personally and jointly and severally liable for the penalties. Dissolving the entity does not discharge that liability.⁠5

Employers' liability from KEMI

The state fund's statute lets it insure employers' liability coverage and the coal-mine, Jones Act and Longshore coverages incidental to and written with comp, which matters for businesses with federal-law exposure.⁠4

Kentucky compared with its neighbors

Workers’ comp and health insurance costs, Kentucky and neighboring states
Kentucky$0.73$0.76$8,936
Illinois$0.77$1.34$9,724
Indiana$0.57$0.71$8,355
Missouri$1.01$1.31$8,084
Ohio$0.58$0.68$8,804
Tennessee$0.60$0.80$8,667
Virginia$0.48$0.73$8,970
West Virginia$1.05$0.54$8,878

Sources

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National figures: NASI (employer comp costs), Oregon DCBS (rate index), AHRQ MEPS-IC (health premiums).

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Other states

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