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​​Insurance is a risk management tool that can help you protect your business, your employees and your customers. Unexpected events cause many successful small businesses to close or can destroy existing assets. Kentucky requires employers to pay for unemployment insurance and workers’ compensation insurance. You should discuss your specific business risks and the types of insurance available with your insurance agent or broker. Your insurance agency can advise you on the exact types of insurance you should consider purchasing.

State Required Insurance for Employers

Unemployment Insurance

Kentucky employers must register with the Office of Employment and Training (OET) to establish a state unemployment insurance account. A good overview of employer obligations can be found in the Kentucky Unemployment Insurance Employer Guide.

Workers' Compensation

Although there are a few exceptions, most employers in Kentucky must provide workers’ compensation insurance coverage for employees. Kentucky does not sponsor a state-run insurance program. Therefore, it is the employers’ responsibility to secure the insurance from a private insurance carrier, or self-insure. See Kentucky Department of Workers' Claims for more information.

The Department of Workers' Claims also provides a helpful Insurance Coverage Look-up Tool which allows you to verify the status of your business.

State Required Insurance for Certain Businesses

Business owners should be aware that licensing boards may require certain types of insurance related to specific professions. For more information, consult your licensing and permitting board.

Basic Types of Business Insurance

Property insurance provides coverage for damage or theft of physical property and equipment. Depending on the ownership of the physical structure where the business is located, the coverage might include both the structure and other assets or be limited to contents.

Flood insurance is not included in property insurance. Business owners interested in protection from floods should contact the National Flood Insurance Program.

Business interruption insurance covers lost earnings due to certain circumstances (outlined in the policy) that shut down the business for an extended period. This insurance may allow the continuation of payroll and payment of utility bills and other expenses needed to keep the business in operation during recovery.

Liability insurance provides coverage for bodily injury, damage to the property of others, personal injury (including libel and slander), and false or misleading advertising.

Commercial auto insurance may offer higher liability limits than a personal auto policy and would pay for medical expenses and property damage caused by an accident involving a vehicle used by the business. In some cases, the coverage might extend to rented vehicles and those owned by employees and driven for company business.

Other types of insurance might be appropriate for those operating a home-based business. In addition, many businesses will choose to offer health insurance or other insurance-related benefits or may want to consider more specialized coverage.

For more information on the basics of insurance, a great resource is to visit Insure U for Small Business from the National Association of Insurance Commissioners.