Buying workers’ compensation for:


State Fund: Yes, Competitive

Insurance Coverage Requirements: Workers’ Compensation is compulsory in Montana, some waivers are permitted.

Who is Required to Purchase Workers’ Compensation Coverage?

The Workers’ Compensation Act applies to almost all employers and to all employees. An employer who has any employee in service under any appointment or contract of hire, expressed or implied, oral or written must elect to be bound by the provisions of compensation Plan 1 (self-insured), Plan 2 (privately insured), or Plan 3 (State Fund).

The Act does not apply to:

  • Household and domestic employment
  • Casual employment
  • Dependent member of an employer’s family for whom an exemption may be claimed by the employer under the federal Internal Revenue Code
  • Sole proprietors, working members of a partnership, working members of a limited liability partnership, or working members of a member-managed limited liability company
  • Broker or salesperson performing under a license issued by the Board of Realty
  • A direct seller
  • Employment for which a rule of liability for injury, occupational disease, or death is provided under the laws of the United States
  • A person performing services in return for aid or sustenance only
  • Volunteers
  • Employment with a railroad engaged in interstate commerce
  • An official, including a timer, referee, or judge, at a school amateur athletic event
  • A person performing services as a newspaper carrier or freelance correspondent
  • Cosmetologist’s services and barber’s services
  • A person who is employed by an enrolled tribal member or an association, business, corporation, or other entity that is at least 51% owned by an enrolled tribal member or members, whose business is conducted solely within the reservation
  • A jockey who is performing under a license issued by the Board of Horse Racing
  • An employer’s spouse
  • A petroleum land professional
  • An officer of a quasi-public or a private corporation or manager of a manager-managedlimited liability company
  • A person who is an officer or a manager of a ditch company
  • Service performed by an ordained, commissioned, or licensed minister of a church
  • Independent Contractors

Factors that Impact Coverage

  • You are a sole proprietor, partner or member of an LLC: In Montana, you are excluded from coverage but have the option to include yourself.
  • You are a corporate officer: Montana includes you in coverage, but you have the option to exclude yourself.

Failure to Secure Compensation

Employers that fail to obtain insurance when required may be ordered by the Department to cease operations until coverage is obtained. The normal penalty for an illegal lapse in worker’s compensation coverage is twice the amount of premium not paid during the uninsured time period or $750, whichever is greater. An employer who has an illegal lapse in worker’s compensation insurance of 7 consecutive days or less is subject to a $100 penalty for each uninsured day up to 7 days, provided that the employer has not previously had an illegal lapse in coverage and that no injury occurred during the uninsured period.

An uninsured employer is personally liable to reimburse the Uninsured Employers Fund for benefit payments to an injured employee. Aggressive collection action including warrants, levies, garnishment and execution against property are used to insure reimbursement. The normal exemptions of property from seizure and sale on execution of a judgment do not apply to uninsured employers.

Proof of Coverage is Required

When insurers issue a policy to employers, they must also provide the employers with an Employee Notice, which employers in turn must post at each worksite. The Department of Labor can provide the standardized format to insurers, and insurers are responsible for having the Employee Notice reprinted in the same format and distributed to employers.

Independent Contractors

Mistakenly classifying an employee as an independent contractor can result in significant fines and penalties.

View 20 factors used by the IRS and our independent contractor questionnaire to determine whether you have enough control over a worker to be an employer.

Key Resources

Other Tips

If your insured employs workers in multiple states or your insured’s employees are temporarily working out-of-state, they need to purchase insurance for all the states where their workers are located, according to each state’s laws. Call 1-800-476-2948 and let us walk you through it.

The nature of your insured’s business, number of employees being covered and past coverage and claims are all factors in how much their premium will cost.