New Jersey Workers' Compensation Insurance

Corporate officers are automatically counted as employees and are covered unless the corporation properly elects to exclude them under the statute. Partners and LLC members are excluded from the coverage trigger by default and generally are not automatically covered under the business's policy. A sole proprietor with no other workers is not required to carry coverage at all, but cannot self-insure informally once even one other worker is hired. Officers, partners, and LLC members who want coverage on themselves, or who need to formally exclude themselves, generally do so through election/exemption forms filed with the carrier or the state, and payroll for included officers may be subject to carrier-applied payroll caps used for rating purposes. Employers should confirm current election paperwork with their carrier since misclassifying an officer as excluded is a frequent audit finding.

Failing to carry required coverage is a disorderly persons offense, and a knowing violation is a fourth-degree crime. Fines run up to $5,000 for the first 10 days of noncompliance and an additional $5,000 for each subsequent 10-day period, plus $1,000 to $5,000 per day for violating a stop-work order. Corporate officers, partners, and LLC members actively engaged in the business can be held personally liable, and these penalties are not dischargeable in bankruptcy (N.J.S.A. 34:15-79).

Most New Jersey employers buy coverage in the competitive private market, where our agency can compare quotes across multiple carriers. Employers who cannot find a voluntary carrier, often due to claims history or a higher-hazard class of business, are placed through the New Jersey Compensation Rating & Inspection Bureau's residual market (assigned risk) mechanism, which assigns the account to a servicing carrier. NJCRIB, an independent state rating bureau (New Jersey is not an NCCI state), files the loss costs and classification system carriers use to price policies. Because New Jersey requires coverage from the first employee with no threshold, even very small employers need to shop this market as soon as they hire their first worker.