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Updated: June 13, 2024

Workers’ compensation coverage that protects Arizona employees and employers

Published By:

Jon Davis

Learn Arizona's workers' compensation insurance requirements

More from our experts

Workers’ comp provides medical treatment and even partial wage replacement should an employee get hurt or sick while on the job and need to miss time. On the flip side, this insurance protects employers from litigation related to workplace injuries. Many times when employees are covered by workers’ compensation they are unable to sue employers for damages related to their injuries or illnesses sustained at work.

What are Arizona’s current workers’ compensation requirements for employers?

In the state of Arizona, the law requires all public and private employers with at least one (1) employee on staff to carry workers’ compensation insurance. Arizona follows a “no fault” system whereby injured employees receive benefits for industrial injuries, no matter who caused the injury.


An exception applies to casual employees, domestic workers in private homes, and independent contractors. Some business owners, such as members of LLCs, corporate officers, partners in partnerships, and sole proprietors, are not required to be covered by workers’ compensation insurance. Workers’ compensation is a “no fault” system in which an injured employee is entitled to receive benefits for an industrial injury, no matter who caused the job-related accident.

How do employers purchase workers’ comp insurance in Arizona?

Workers’ compensation insurance can be purchased from private carriers or — if a high-risk company and cannot buy the policy from a private carrier — from a competitive state fund. Your broker can help you research options that make sense for the needs of you and your employees.

Are you required to provide workers’ compensation when working with independent contractors?

For Arizona businesses that hire independent contractors, there’s no requirement to provide workers’ compensation insurance. That said, you need to be sure the person you are working with meets the classification of an independent contractor.

What Arizona workers’ compensation covers

In a nutshell, coverage protects employees who experience accidents or injuries that happen on the job (and need time off to recover). For example, if your employee breaks a foot while moving packages, workers’ compensation can help provide medical benefits.

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Do you need workers’ compensation insurance in Arizona as a sole proprietor?

Sole proprietors are not required to have workers’ compensation insurance coverage in Arizona, though they could elect to carry coverage for themselves. However, if there are any employees working for the sole proprietor, the sole proprietor is required to maintain workers’ compensation insurance on them.


More resources for Arizona employers

In addition, here are some resources that you may find helpful.


Why workers’ comp is worth a closer look

Purchasing a workers’ compensation policy is a legal requirement in Arizona, but it’s also a win-win situation for both you and your employees. For many businesses, their employees are their most valuable resource, so putting their safety first is a no-brainer. Moreover, because this insurance protects employers from litigation related to workplace injury and illness, it can help put their minds at ease. So if you are a business owner in the state, it can be a good idea to understand how policies work and how to set one up to stay compliant.


Please note all material in this article is for educational purposes only and does not constitute tax, benefits or legal advice. You should always contact a qualified tax, legal or financial professional, in your area for comprehensive tax or legal advice.

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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.