Essential Takeaways:
- Connecticut requires workers’ comp if you have one or more employees, with no exceptions based on business size.
- Sole proprietors and single-member LLCs are not automatically required to cover themselves.
- The ABC Test is applied to determine whether your 1099 drivers are actually employees under state law.
- The “Statutory Employer” rule can hold you personally liable for an uninsured subcontractor’s injury.
- Pay-As-You-Go policies let growing startups stay covered without paying a large upfront premium.
Consumers have been increasingly turning to online shopping in recent years, making it an excellent time to start a delivery business in Connecticut. Last-mile logistics, in particular, has seen rapid expansion, with small founders finding opportunities ranging from a single van to a loose network of 1099 drivers. However, some legal obligations can catch new owners off guard, especially the Connecticut workers’ compensation rules. Here’s what every CT delivery startup owner needs to know:
The “One or More” Rule: Connecticut’s Baseline Requirement
Connecticut’s Workers’ Compensation Act is very clear: any operation with one or more employees must carry coverage. There are no thresholds, and exemptions are not made based on business size or revenue. One employee is enough to trigger this obligation.
Delivery and courier startups have been attracting increased attention from state agencies lately, thanks to the rapid growth of the last-mile sector and the loose structures often seen between operators and drivers. As a result, it is essential to get Connecticut workers’ compensation right.
Scenario A: The Single-Member LLC or Sole Proprietor
Are You Your Own Employee?
If you are running a single-member LLC or operating as a sole proprietor, the state of Connecticut does not automatically require you to obtain coverage for yourself. Owners are excluded by default.
This might sound like a good way to save money, but keep in mind that if you’re out on a run and get hurt, there’s no workers’ comp benefit waiting. All of your medical bills and lost income will come out of your pocket.
The Inclusion/Exclusion Choice Gives You More Control Than You Think
There are two forms to be aware of: Form 75, which allows a sole proprietor or partner to opt into coverage voluntarily, and Form 6B, which enables LLC managers and corporate officers to formally exclude themselves from a policy, thereby reducing their premiums.
Bear in mind, however, that even if you are not legally obligated to get coverage for yourself, many logistics partners will require you to supply a Certificate of Insurance and proof of a workers’ comp policy before they will sign a contract with you. A “ghost policy” is a compliant policy that covers employees but lists no owner payroll, meeting these contractual requirements without adding high cost.
Scenario B: The 1099 Team and the “ABC Test”
Why the 1099 Label Doesn’t Always Protect You From Liability
Labeling someone an independent contractor doesn’t automatically make them one under Connecticut law. Instead, the state uses the ABC Test to determine whether a worker is truly a contractor or a covered employee.
Part A of this test looks at control: Does the driver set their own route, hours, and schedule without your direction? Part B considers whether the work falls outside the normal course of your business. If you are a delivery startup, delivery is your primary business, which means you are highly unlikely to satisfy this requirement. Part C examines whether the driver operates their own independent business and works for multiple clients.
Should a driver fail even one part of the test, Connecticut will consider them an employee and subject to the workers’ comp requirements.
The “Statutory Employer” Trap: A Founder’s Biggest Risk
Section 31-291 of the Connecticut General Statutes creates what is known as the “Statutory Employer” or “Principal Employer” rule. If your 1099 driver is hurt on the job and does not have their own workers’ comp policy, the state considers the contracting business responsible for their claim. Unfortunately, many founders mistakenly assume their contractor agreement transfers that liability.
There is a second exposure to be aware of: audit shock. At the end of a policy year, your insurance carrier will review your financial records. If they find 1099 subcontractor payments that were not covered under any policy, they could reclassify them as payroll payments and charge back premiums.
2026 Checklist for Delivery Startups
| Factor | Employee Status? | Insurance Required? |
| W2 Driver | Yes | Mandatory |
| 1099 (Fails ABC Test) | Likely Yes | Highly Recommended |
| Uninsured Subcontractor | Yes (Statutory) | Mandatory |
| Founder (LLC Member) | Yes (Automatic) | Optional (with Form 6B) |
Pay-As-You-Go: The Scaling Startup’s Secret Weapon
Startups must contend with significant budgetary pressures, particularly as they grow. A traditional workers’ comp policy will call for making a big deposit up front based on your estimated annual payroll.
However, pay-as-you-go policies offer an alternative in which premiums are calculated based on your actual payroll, either weekly or biweekly, rather than a yearly projection. This means that when your business slows, your costs will be adjusted accordingly. This helps you avoid large down payments and potentially costly surprises during year-end audits.
How JMG Insurance Corp Guides CT Startups
JMG Insurance Corp works specifically with Connecticut delivery founders to sort through all of these concerns. Our process begins with a startup onboarding audit that involves reviewing your driver agreements and contractor relationships to identify classification risks.
From there, JMG connects clients with carriers who understand the 2026 last-mile delivery model and offer competitive rates for new businesses. We can also help with correctly filing Forms 6B and 75 and keeping policies lean, compliant, and structured for growth.
Build Your Delivery Empire on a Solid Foundation
Just a single injury, state audit, or uninsured subcontractor claim could create serious financial exposure for your young business. Sorting this out early costs far less than fixing it later.
Are you ready to get it right? Contact JMG Insurance Corp for a 2026 Connecticut workers’ compensation consultation. We’ll review your driver agreements, identify any classification risks, and put together a Pay-As-You-Go quote that grows with your fleet.
