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Alabama workers' compensation insurance: Your guide to requirements and getting a policy
Workers’ compensation insurance in Alabama is essentially a requirement for doing business in the state. If you’re looking for information on Alabama’s workers’ compensation requirements, this guide covers why it’s important for employers and how to secure coverage with Beyond.
If an employee is injured or becomes ill while on the job and is unable to work, workers’ compensation provides medical treatment and partial wage replacement during recovery. It also protects employers by limiting legal liability—employees covered by workers’ comp generally cannot sue their employer over workplace injuries or illnesses.
If your business regularly employs five (5) or more employees, you are legally required to carry workers’ compensation insurance in Alabama. There are some exceptions, but most employers must obtain coverage.
Most businesses can purchase a policy from private insurance carriers. However, if your company is considered high-risk and cannot get standard coverage, you may be eligible to purchase insurance through the Alabama Assigned Risk Pool.
Alabama employers may also choose to self-insure, meaning they pay their own workers’ compensation claims instead of using an insurance provider. To qualify, businesses must meet the following financial requirements:
A net worth of at least $5 million
Positive income over the past three years
An assets-to-liabilities ratio of at least 1:1
You can find more information about self-insurance in the Alabama Department of Industrial Relations Administrative Code, and the Alabama Department of Labor outlines the five options for electing coverage.
Yes. According to the state, employers of domestic employees, farm laborers, and casual employees are not required to provide coverage—but they may choose to opt in.
Failing to provide workers’ comp coverage in Alabama can result in serious penalties:
$1,000 fine per employee, per day without coverage
Potential jail time
Possible business closure until coverage is in place
Because Alabama has a private insurance market, employers can buy coverage from any licensed carrier or agency in the state. Beyond makes this process simpler by offering flexible, transparent options tailored to your business size and payroll.
1. Traditional coverage
Premiums are estimated based on your business’s annual gross wages. You typically pay an upfront lump sum, followed by monthly or quarterly installments.
2. Pay-as-you-go coverage
With pay-as-you-go plans (offered by Beyond), premiums are calculated in real-time with each payroll cycle. This approach prevents overpayment, removes the need for large upfront costs, and eliminates the hassle of year-end audits.
As your business grows, you might also be interested in topics like Alabama payroll taxes, budgeting, or employee onboarding. Beyond offers tools and resources to help you stay compliant and efficient.
Access resources from the Alabama Workers’ Compensation Division
Download Alabama’s claim handling form
Workplace accidents can happen anytime. Workers’ compensation coverage not only protects your employees – it shields your business from costly legal issues and ensures compliance with Alabama law.
Beyond simplifies this process so you can focus on running your business with peace of mind.
