Maryland business insurance requirements

Maryland requires workers' compensation from the first employee and keeps a guaranteed market for it in Chesapeake Employers' Insurance Company. Its paid family and medical leave program is close: payroll contributions start January 1, 2027 and benefits a year later. On the liability side, Maryland is one of the few places that still applies contributory negligence, which bars a plaintiff who shares any fault, and it caps noneconomic damages.

Workers' compensation requirements

"Each employer shall secure compensation for all covered employees," by insuring with an authorized insurer, joining a self-insurance group or qualifying to self-insure (Lab. & Empl. §9-402). There is no small-employer threshold; one paid employee is enough. Casual employees are not covered employees (§9-205).

The owner rules turn on entity type. A sole proprietor is not covered unless they work full time in the business and elect coverage by written notice (§9-227). Corporate officers and LLC members who are paid for their services are covered employees, but several groups may elect out: officers of a close corporation, up to five officers of any other corporation, officers owning at least 20% of a farm or professional corporation, and LLC members owning at least 20%. The election takes effect only after the business notifies the Commission and its insurer in writing (§9-206). See can owners and officers exclude themselves from workers' comp?.

Contractors carry their subs' risk. When a principal contractor hires a subcontractor to do work that is part of its own business, it owes comp to the sub's injured employees as if it had hired them (§9-508). An uninsured sub's claim lands on the general contractor's policy and its experience modification rate, which is why GCs collect certificates and audit them at renewal.

Penalties come from two directions. After a show-cause hearing the Commission orders an uninsured employer to buy coverage and pay up to $25,000 to the Uninsured Employers' Fund, then up to another $25,000 if it ignores the order for 30 days. The penalty is a lien on the employer's assets, and the managing officer of a corporation or LLC is personally liable if they knowingly failed to insure (§9-407). Failing to insure is also a misdemeanor carrying a fine of up to $5,000, up to a year in jail, or both (§9-1107).

Chesapeake Employers' Insurance Company, formerly the Injured Workers' Insurance Fund, has been the state's insurer of last resort since 1914 and became a private, nonprofit, nonstock insurer. Since October 1, 2013 it must serve as the insurer of last resort as a condition of its authority, and it may not cancel or refuse a policy except on statutory grounds (Ins. §24-306). NCCI files advisory loss costs: its August 2025 filing proposed a 12.3% decrease for January 1, 2026, and its August 13, 2026 filing proposes a 5.4% decrease for January 1, 2027 (NCCI). For the coverage itself, see workers' compensation insurance: how it works.

Disability and paid leave mandates

Maryland has no state short-term disability program. Its Family and Medical Leave Insurance program, FAMLI, starts collecting money on January 1, 2027. The initial rate is 0.9% of wages up to the Social Security wage cap, split equally between employer and employee; employers with fewer than 15 employees, counting out-of-state workers, remit only the 0.45% employee share. The first quarterly payment, for wages paid January through March 2027, is due April 30, 2027, and the rate can never exceed 1.2% (Maryland Department of Labor). Benefits begin January 1, 2028: up to 12 weeks of paid, job-protected leave at up to $1,000 a week (FAMLI). Private plans may substitute for the state plan. Budget for the payroll cost now and see state disability and paid family leave programs: every mandate in 2026.

Commercial auto requirements

Every Maryland vehicle needs at least $30,000 per person and $60,000 per accident for bodily injury and $15,000 for property damage (Transp. §17-103), plus personal injury protection of up to $2,500 unless waived (Ins. §19-505). Maryland also applies federal financial responsibility levels to for-hire trucks over 26,000 pounds GVWR hauling property within the state and to placarded hazmat vehicles (Transp. §25-111.1), so an intrastate hauler can need $750,000 or more. See FMCSA insurance requirements and filings for motor carriers and commercial auto insurance: what it covers and what it leaves out.

The business insurance market in Maryland

Flash flooding and coastal storms drive the property losses. Howard County was declared a federal major disaster after severe storms and flooding on July 30, 2016 (DR-4279), and Baltimore and Howard counties after flooding that began May 27, 2018 (DR-4376). Tropical Storm Isaias brought another declaration for Calvert, Dorchester and St. Mary's counties in 2020 (DR-4583). Standard commercial property forms exclude flood; NFIP commercial policies top out at $500,000 building and $500,000 contents, and the program is authorized only through December 11, 2026 (FEMA). See Commercial flood insurance: NFIP limits and private options.

The Maryland Joint Insurance Association is the residual property market. It writes basic "essential property insurance" against fire, windstorm, vandalism and similar perils, but not on manufacturing property worth more than $250,000 at a business with 25 or more employees (Ins. §25-401). See FAIR Plans and residual markets for commercial property. Surplus lines brokers charge the insured a 3% premium receipts tax and report it to the Insurance Administration by March 15 and September 15 (Ins. §§3-324, 3-325); see surplus lines taxes, stamping fees and diligent search.

Liability law that affects premiums

Contributory negligence still applies. In Coleman v. Soccer Ass'n of Columbia (2013), the Court of Appeals again declined to adopt comparative negligence, leaving any change to the General Assembly (opinion). A plaintiff whose own negligence contributed to the injury recovers nothing, which strengthens defense positions in slip-and-fall and auto claims.

Noneconomic damages in personal injury and wrongful death cases are capped. The cap was $500,000 for claims arising on or after October 1, 1994 and rises $15,000 every October 1 (Cts. & Jud. Proc. §11-108); by that formula it is $980,000 for causes of action arising from October 1, 2026 through September 30, 2027 (our calculation). Wrongful death claims with two or more beneficiaries are capped at 150% of that figure.

In construction, §5-401 voids clauses requiring a party to indemnify or defend another against injury or damage caused by the other's sole negligence, but it does not touch insurance contracts, which is why owners rely on additional insured endorsements explained. Most civil actions must be filed within three years (§5-101); contracts under seal get twelve (§5-102).

Where to get help

• Maryland Insurance Administration (insurance.maryland.gov): 410-468-2000 or 800-492-6116; property and casualty complaints 410-468-2340. File complaints against insurers, agents and brokers online or by phone; the fraud tip line is 800-846-4069.
• Maryland Workers' Compensation Commission (wcc.state.md.us): 410-864-5100. It records owner exemption notices, holds hearings on uninsured employers and resolves claims.
• Maryland Department of Labor, FAMLI Division (labor.maryland.gov/famli) for registration, contribution rates and private plan approvals.

Confirm your obligations with the agency or a licensed broker, and compare states with the workers' comp and benefits requirements by state.