Are all businesses required to carry workers' compensation insurance? Generally speaking, the answer is yes. However, there are a few unique situations in which companies are legally exempted from the mandated insurance coverage dictated by state law. Although the specific laws vary from state to state, your business may qualify for a workman's comp exemption for one of the following reasons. If you operate a sole proprietorship or a business with fewer than 2 or 3 employees, your state may not require that you carry workers' compensation insurance. Conversely, if your company is large enough to have a track record of substantial earnings over a long period of time, you may qualify for "self-insured" status, a situation in which you agree to bear financial responsibility for the costs associated with workers' compensation claims initiated by your employees. Additional exemptions may exist in your area; check with a qualified workers' compensation attorney to learn more about the legal requirements facing your company.