Construction COI requirements by state

The short answer: the contract sets the requirements, not the state

The single most common misconception about construction insurance is that the state dictates what coverage a subcontractor must carry. In practice, the overwhelming majority of what appears on a certificate of insurance—which coverage lines are required, what the limits are, and which endorsements must be attached—comes from the contract, not from a statute. The project owner passes requirements down to the general contractor in the prime contract, and the GC passes them down to each sub in the subcontract.

That’s why a $1M/$2M general liability requirement, a $1,000,000 combined single limit on commercial auto, an additional insured endorsement, waiver of subrogation, and primary and non-contributory language show up on nearly every construction COI in the country. These are risk-transfer standards written into contracts—not DMV or state-fund minimums. State minimum auto liability limits, for example, are often as low as $25,000/$50,000/$15,000, far below what any GC would accept.

What genuinely varies by state

A short list of things really is governed by state law, and getting them wrong can leave a sub non-compliant even when their COI looks clean. The big three for construction are:

• Workers’ compensation—whether it’s mandatory, at how many employees, whether owners/sole proprietors can be exempt, and *where* it must be purchased. This is the area with the most state-by-state variation and the biggest COI implications.
• Commercial auto minimums—state DMV minimum liability limits differ (Insureon), but these are almost always below the $1M CSL your contract requires anyway.
• Licensing-tied insurance mandates—some state contractor-licensing boards require proof of GL or workers’ comp to issue or renew a license, and set their own minimums (Insureon).

For the coverage lines themselves—GL, auto, umbrella/excess, and the endorsements—your subcontract and the owner’s requirements are what govern. See subcontractor insurance requirements for how to build that baseline.

Workers’ compensation: the biggest state variable

Nearly every state requires workers’ compensation insurance once a business has employees, but the details differ in three ways that matter for COI review.

1. The employee threshold and owner exemptions vary

Most states require workers’ comp starting at the first employee, but thresholds and construction-specific rules differ. Florida, for example, requires coverage in the construction industry at just one employee—including corporate officers and LLC members—while non-construction businesses aren’t required to carry it until four or more employees (Florida CFO / Division of Workers’ Compensation). Sole proprietors and owners can often file for an exemption, but those exemption certificates are state-specific and typically expire, so a sub who claims they’re exempt should be able to produce a current exemption certificate for the state where the work is performed.

2. Four monopolistic states require coverage from a state fund

In four monopolistic states, employers cannot buy workers’ compensation from a private insurer at all—they must purchase it from the state fund: Ohio, North Dakota, Washington, and Wyoming (Insureon; The Hartford). A subcontractor operating in these states will not have a standard private WC policy line on their ACORD 25; instead their proof of coverage comes from the state agency (for example, Ohio’s Bureau of Workers’ Compensation or Washington’s Department of Labor & Industries). If you review a Washington or Ohio sub’s certificate expecting a normal carrier-issued WC line, it can look "missing" when it’s actually satisfied through the state fund.

3. Texas makes workers’ comp optional

Texas is the outlier: it’s generally the only state where private employers can opt out of the workers’ compensation system entirely and become "non-subscribers" (Texas Department of Insurance; Texas Labor Code §406.002). That doesn’t mean you should accept an uninsured sub in Texas—most GCs still require WC by contract for every sub, and coverage is mandatory for public/government contracts. But it does mean a Texas sub without WC isn’t automatically breaking state law, so your contractual requirement is what protects you.

Notable state nuances at a glance

These are the state-specific facts most likely to trip up a COI review. Limits and coverage lines beyond these are set by your contract, not the state.

This table covers verified statutory nuances only. It is not a complete list of every state’s rules, and it deliberately avoids per-state dollar minimums—because those are almost always superseded by the higher limits in your contract.

A framework for multi-state COI compliance

If your subs work across state lines, don’t try to memorize 50 rulebooks. Standardize first, then layer state overrides on top:

1. Set one strong baseline. Define your required coverage lines, aggregate limits, and endorsements (additional insured, waiver of subrogation, primary and non-contributory) once, and apply them to every subcontractor regardless of state.
2. Layer the workers’ comp overrides. For subs in Ohio, North Dakota, Washington, or Wyoming, expect state-fund proof of coverage plus stop-gap employers’ liability rather than a private WC line. For Texas, rely on your contract, not the statute. For low-employee-count subs, verify the threshold and any exemption certificate for the state of work.
3. Confirm the state of the work, not just the sub’s home state. WC obligations follow where the employees actually perform the work, so a sub headquartered in one state working in another may need coverage recognized in the job-site state.
4. Check licensing-tied insurance where it applies. Some states require GL or WC proof to hold a contractor license; a lapsed policy can put the license—and the sub’s eligibility to work—at risk.
5. Grade every certificate against your rules, then monitor expirations. A COI is only accurate the day it’s issued; continuous tracking is what keeps multi-state coverage current.

For a broader version of this discipline beyond construction, see the vendor insurance compliance guide and what COI tracking is.

Where software helps multi-state contractors

Manual, state-by-state review is where multi-state programs break down—especially the monopolistic-state WC lines that look "missing" but aren’t, and expiration dates scattered across dozens of subs. Software that reads each ACORD 25, understands state-fund coverage, and grades every certificate against your baseline turns that judgment call into a consistent, repeatable check. Automatic expiration tracking then keeps coverage current across every state you work in.

This applies whether you’re a general contractor tracking subs or a property manager tracking vendors across a multi-state portfolio. Compare tools on the best COI tracking software page.