Workers’ Compensation Insurance NJ: Everything You Need to Know

In New Jersey, businesses with one or more employees are required by law to have workers’ compensation insurance. Workers’ compensation insurance in NJ covers the costs of medical treatments for workers who get injured on the job. For the economy of New Jersey, this type of coverage is important as New Jersey’s small businesses are very important. 

With over 800,000 enterprises and counting, New Jersey ranks 11th in the number of small businesses in the US, which is very impressive. If you are a business owner in New Jersey, you probably want to know more about New Jersey workers’ compensation insurance. Here’s a simple breakdown of everything you need to know. 

Workers putting new tracks on the road.

Why Contractors Need Workers’ Compensation Insurance in NJ

Life is all about taking chances and risks. But, like what they always say, if you can’t afford to lose something, you should never risk it. It can be applied to many phases in life, especially those involving substantial risk regarding your business. Hiring contractors and acquiring liability insurance are included in this risk option.

It’s less expensive to hire uninsured contractors, but it’s not going to be a great idea for general liability. If you take a contractor for home construction and remodeling projects, he must assume his responsibility. And with massive responsibility comes the same vast and general liability. That’s why contractors should also think about purchasing New Jersey workers’ compensation insurance.

Types of New Jersey Workers’ Compensation Coverage


General Liability 

If someone visits the construction site, they don’t have to worry because they are also protected with the general liability of workers’ compensation insurance NJ. It is essential because whenever they get hurt caused by falling debris or lumber, the medical fees will be paid by insurance. On the other hand, if the personal belongings of the owner like their car are being damaged at the site, the repairs for the property damage will be paid by the general liability insurance.

Tools & Equipment Coverage

If you are worried about losing access to your valuable equipment or tools, you can be assured that the workers’ compensation insurance is a big help. This coverage is meant to pay or replace any piece of equipment being used in the construction business. When buying a new wrench after being stolen or lost, it might be feasible, but getting a new excavator is not. That said, this insurance coverage can help.

Employee Coverage 

New Jersey workers’ compensation insurance is needed if you want to consider New Jersey contractor insurance, regardless of your company, limits to 500 employees, or employ a few more. Workers’ compensation coverage is available to pay for the treatment of an employee who gets injured in any way possible while performing their work. Also, the workers’ compensation insurance might be of big help whenever an injured employee plans a lawsuit against one’s business. The coverage can also be connected to bodily injury, which ensures the employee’s safety and security. Bodily injury coverage will pay for any damage done to workers while doing their job.

Business Vehicle Insurance

If you plan to operate or use your company‘s car, a commercial auto, or even your own car for work reasons, you must consider vehicle or commercial auto insurance coverage from the NJ contractors insurance. So, whenever you cause an accident to someone while driving the car for business purposes, the damages you caused will be paid for by the auto insurance.


Considering a sure bond to your NJ contractors insurance ensures guaranteed construction field services. The insurance policy will cover any fees you get if a breach of contract is present.

How Much Does Workers Compensation Insurance NJ Cost

Contractor insurances reimburse an average premium amounting to $90 every month. It’s massively equal to $1,090 every year for most general liability coverage and professional liability insurance policy. These policies for contractors give them protection from third-party property damage, advertising injuries, and third-party injuries.

It’s important to get contractors that are insured and licensed. You might get a tempting offer of insurance for contractor offers from others, but you must never risk hiring an uninsured crew. With trusted and reliable contractors getting your job done, you’ll feel secure and sleep better.

Workers Compensation Insurance NJ FAQ

Is Workers’ Compensation Insurance Required in NJ?

In New Jersey, every business that has employees is required to have worker’s compensation insurance. There are some exceptions to the state law, including employers covered by federal programs and members of limited liability corporations (LLCs), sole proprietors, and partners in partnerships who don’t employ other people. However, part-time and seasonal employees must be covered by workers’ compensation insurance.

What is the Minimum Payroll for Workers’ Compensation in NJ?

Sole proprietors, partners and LLC members are required to use a minimum payroll amount of $34,320 for work comp rating purposes. Furthermore, corporate officers must use the minimum payroll of $34,320 to calculate the costs of the workers’ compensation policy. 

Is Workers’ Comp Insurance Taxable in NJ?

Workers’ compensation is not subject to income tax in New Jersey. According to the New Jersey Gross Income Tax Act, any amount that is received as workmen’s compensation for personal injuries or sickness is excluded from gross income. 

Can Owners be Excluded from Workers’ Compensation in New Jersey?

Because all corporations must carry workers’ comp insurance in NJ, and because the owners are considered employees of the company, that means they cannot be excluded from the policy. 

What is the Maximum Workers’ Compensation Benefit in NJ?

There is an insurance policy compensation maximum and minimum that changes every year in each state. In New Jersey, the maximum weekly benefit is $969 for the injuries that happen in 2021. 
Did you like this article? If so, make sure you learn more about Business Owners Policy (BOP) too!