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Tennessee business insurance: requirements and costs

Tennessee prices workers' comp from loss costs filed by NCCI and approved by the Commissioner of Commerce and Insurance, and the latest approval is an increase: 4.8% on top of the loss costs in force since March 1, 2026, effective October 1, 2026.⁠1⁠6 The headcount trigger depends on your trade. Outside construction you need coverage at five employees, but a construction business with one employee must cover everyone, including its owners unless they register an exemption.⁠2⁠3

Checked against 11 sources Last reviewed How we check figures

Tennessee at a glance

Workers’ comp required5+ employees; 1+ in construction; all in coal mining
Where employers buy itPrivate insurers
Rates set byNational Council on Compensation Insurance
Employer comp cost, 2023$0.60 per $100 of covered wages (US $0.98)
Comp rate index, 2024$0.80, ranked 39 of 51 (1 = most expensive)
Employer health premium, 2025$8,667 single, $25,123 family (average total premium)
Auto liability minimum25/50/25

Tennessee has no state fund. Employers buy comp from a licensed insurer, join an approved group self-insurance pool, or apply to self-insure individually, all with Department of Commerce and Insurance approval. An employer refused by two licensed insurers can enter the NCCI Assigned Risk Plan.⁠5 NCCI is the state's designated rate service organization, and its class codes carry a set rate per $100 of payroll.⁠6 The state's rate decisions are made on loss costs. State law requires the Commissioner to consult the Advisory Council on Workers' Compensation before approving a filing and to act within 90 days of receiving it.⁠1 In the latest cycle NCCI filed on June 8, 2026 for a 4.8% increase over the loss costs and assigned risk rates that took effect March 1, 2026. The Advisory Council recommended approval on August 3, and the Commissioner approved it on August 25, effective October 1, 2026.⁠1

Your class decides more than your headcount does. The class code with the largest payroll is your governing class code, and it determines whether you are a construction services provider or a non-construction employer.⁠6 Construction services providers must insure every worker, including part-time, seasonal and family members, and admin staff are covered under the same policy.⁠3 Everyone else counts employees, with minors, family members and part-timers included, and corporate officers counted unless unpaid.⁠3⁠4 The state uses a seven-factor test, weighted toward who controls the work, to decide employee versus contractor status, and a 1099 does not settle it.⁠3 The compliance penalty is 1.5 times the premium you avoided, rising to three times for multiple violations in five years.⁠7 By our calculation, a business that avoided a $20,000 premium would be assessed $30,000, or $60,000 on a repeat.

Official cost data places Tennessee below the national figure and still falling. NASI estimates Tennessee employers spent $0.60 per $100 of covered wages in 2023, against $0.75 in 2019. That is a 20% drop by our calculation, compared with 16% nationally, where the 2023 figure was $0.98.⁠9 Oregon's 2024 ranking, based on manual rates in effect January 1, 2024, puts Tennessee 39th of 51 at an index of $0.80 per $100 of payroll, 73% of the median state.⁠10 Neighbors range from Virginia at $0.73 and Kentucky at $0.76 to Alabama at $1.11 and Missouri at $1.31.⁠10 Those figures predate the October 2026 increase. As a worked example (our calculation), a $20,000 premium whose loss cost moved exactly 4.8%, with payroll, experience modification and insurer multiplier unchanged, would rise to about $20,960.

On health benefits, AHRQ's 2025 survey found 53.5% of Tennessee private-sector establishments offered insurance, above the 49.2% national share. Among establishments of firms with fewer than 50 employees, only 28.7% did, against 32.1% nationally. Where small firms offered it, the average single premium was $8,365 per enrolled employee, about 7% below the $9,034 national small-firm figure by our calculation.⁠11

Workers’ compensation in Tennessee

Employers outside construction must carry comp once they have five or more employees, counting part-time workers, family members and minors. Construction services providers with one or more employees must cover all of them, and coal mining employers must cover all employees.⁠2⁠3 A construction services provider from another state must have a Tennessee policy with Tennessee listed in item 3A from the first day it works in the state.⁠3

Who is exempt

  • State and local governments, which may elect coverage
  • Employers of farm laborers or domestic help, who may elect coverage
  • Outside construction, sole proprietors, partners and LLC members are not counted as employees
  • Corporate officers may exempt themselves from the policy but still count toward the employee total unless unpaid
  • Construction owners may register on the Workers' Compensation Exemption Registry if they are a 100% sole proprietor, a corporate officer, or an LLC member or partner with at least 20% ownership. Owners and family members holding at least 95% together may also qualify. The exemption lasts two years and employees must still be covered

Buying coverage and who sets the rates

Employers buy from any of the more than 300 insurers licensed in the state through an agent or broker, join an approved group self-insurance pool, or self-insure individually. After two refusals from licensed insurers they can enter the NCCI Assigned Risk Plan, where around 10 companies write policies.⁠5 There is no state fund.

Latest rate decision (1 Oct 2026): Commissioner's order No. 26-54 (entered Aug. 25, 2026) approved NCCI's filing for a +4.8% increase in voluntary loss costs and assigned risk rates, on top of the levels that took effect March 1, 2026. Official notice.

Individual self-insurance and group self-insurance pools, trusts, funds or associations are allowed once approved by the Department of Commerce and Insurance.⁠5

Penalties for going without

The Bureau's Compliance Program assesses a penalty of 1.5 times the avoided premium, rising to three times for multiple violations in five years. Every assessed entity is offered an interest-free payment plan and can ask for a contested case hearing. Ignoring a Bureau subpoena can add a civil penalty of $50 a day, up to $5,000.⁠7

What Tennessee employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearTennesseeUnited States
2019$0.75$1.17
2020$0.69$1.08
2021$0.64$1.01
2022$0.63$1.00
2023$0.60$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 Tennessee’s index for rates in effect on 1 January 2024 at $0.80 per $100 of payroll, 27% below the national median of $1.09 (rank 39 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 Tennessee

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureTennesseeFirms under 50United States
Single coverage, total premium$8,667$8,365$9,025
Family coverage, total premium$25,123$24,654$26,281
Employee share, single$1,645–$1,817
Employers offering coverage53.5%28.7%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 Tennessee

Every vehicle registered in Tennessee, 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.

Liability of $25,000 per person for injury or death, $50,000 per accident and $25,000 for property damage. A vehicle with a commercial license plate must be covered by a commercial auto policy.⁠8

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 Tennessee rules that affect insurance costs

Construction owners must cover themselves or register

Owners of construction businesses are required to carry comp on themselves unless they qualify for and register an exemption, and the exemption is open only to owners in the construction services industry. The Bureau found employees signed up for the registry without their knowledge, who then paid for workplace injuries themselves.⁠3⁠4⁠7

Check subcontractors before they start

Construction services providers are expected to use subcontractors that comply with the comp rules, and the Bureau offers a coverage verification tool to check a subcontractor's status.⁠3

Report the policy to NCCI

The adjusting entity must notify NCCI within 30 calendar days of procuring or renewing a comp policy, and the class codes it assigns are what set the rate per $100 of payroll.⁠6

Tennessee compared with its neighbors

Workers’ comp and health insurance costs, Tennessee and neighboring states
Tennessee$0.60$0.80$8,667
Alabama$0.85$1.11$8,169
Arkansas$0.57$0.53$7,804
Georgia$0.82$1.09$8,907
Kentucky$0.73$0.76$8,936
Mississippi$0.91$0.94$7,612
Missouri$1.01$1.31$8,084
North Carolina$0.62$0.95$8,612
Virginia$0.48$0.73$8,970

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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