University of Maryland Extension

Mandatory insurance

Nicole Cook, B.S., J.D., LL.M., Environmental and Agricultural, Faculty Legal Specialist, Agriculture Law Education Initiative (ALEI), University of Maryland Eastern Shore

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If you own a business, you may be legally required to carry certain insurance for your employees. Even if you’re not required, however, it might be prudent to obtain coverage to protect your farm business against unforseen losses. Requirements for legally required employee insurance vary from state to state. Every state has a department or division of insurance and a department of labor. Check your state’s insurance department and department of labor for information about your state’s requirements.

Maryland's Insurance Administration is online here:

They keep a list of agricultural insurance providers, and have a helpful guide to agricultural insurance.


Unemployment insurance provides for payments of unemployment compensation to workers who have lost their jobs through no fault of their own. The IRS and state workforce agencies require most employers to pay federal and state unemployment insurance, which provides benefits to eligible workers who have lost their jobs. State criteria vary, but IRS requirements are generally standard. Under federal law, if your employees qualify as farmworkers, you’re subject to Federal Unemployment Tax (FUTA) on the wages you pay them if you meet certain criteria. (See following column for link to IRS FUTA website for the most current requirements.)

Information about FUTA, including who must pay and how to figure out how much tax to pay, see IRS Publication 15. For a list of state unemployment agencies, visit the U.S. Department of Labor’s website at

Workers’ compensation

Workers’ compensation insurance provides income replacement and rehabilitation and medical benefits to employees who are injured at work. Workers' compensation benefits are secured by insurance policies, paid for by the employer. Because it is a no-fault insurance, employers are responsible for benefit payments regardless of what caused the on-the-job injury or who contributed to it. Most states require employers to obtain workers’ compensation insurance. Although agriculture is one of the nation's most hazardous industries, about half of all states allow agricultural employers to provide little or no workers' compensation coverage for migrant and seasonal farmworkers.

If your state does not require workers’ compensation insurance, but you would like to provide it, contact your state’s workers’ compensation division for requirements. If the insurance is not legally required and you choose not to carry it, still contact the division, as it may require you to carry out certain procedures, such as providing each employee with a written statement of non-coverage.

In Maryland, agricultural employers with less than three full-time employees or an annual payroll for full-time employees below $15,000 are exempt. Agricultural office workers, independent contractors on farms (other than migrant laborers), and owner-operators of large tractor-trailer vehicles are also exempt. Workers Compensation insurance can be purchased from a commercial provider or Maryland’s state-administered fund.

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