When do I need Workers' Comp Insurance?

Workman’s Comp Insurance, known today as “Workers’ Compensation Insurance,” is one of the few small business insurance policies regulated at the state level. Though where you live determines your insurance obligations, most states require employers to carry the coverage as soon as they hire their first employee. You can look up your state’s laws in our guide, “Workers’ Compensation Insurance Laws by State,” or consult the list below.

When to Purchase Workers’ Compensation Coverage: Details

As you may already know, Workers’ Comp ensures your business can take responsibility for the occupational injuries its employees suffer. This small business insurance policy can pay for employee medical expenses, replacement wages, and your legal expenses if your work-injured employee decides to forgo benefits and sue your business instead.

While it’s a good idea to carry coverage regardless of your state laws, you should still know your legal obligations so you fully comply. Each state has its own stipulations governing Workman’s Comp coverage.

Some states only require coverage when your business has a certain number of employees. In Florida, for example, the mandate doesn’t kick in until you have four or more employees, so long as you don’t work in construction. Other states, such as West Virginia, require you to have adequate Workers’ Comp coverage even if you only have one employee.

Your industry may also affect your need for insurance (e.g., roofers in California must carry Workers’ Compensation even if they don’t have any employees).

To learn what your state has on the books, click the appropriate link below:

If you have other questions about your Workers’ Comp obligations, such as how much coverage you need to comply with state laws, contact an insureon agent at 800.688.1984.

What Happens If I Don’t Have Workers’ Comp Insurance?

If you’re in Texas, where Workers’ Comp coverage is optional, nothing happens. You’ll simply have to hope your employees aren’t injured because of their work. If they are, they can sue your business for damages.

If you decide to forgo coverage even though your state’s laws require it, prepare for steep financial consequences.

Though the price and penalty for noncompliance varies from state to state, in general, you may…

  • Be sued by the state for noncompliance.
  • Be ordered to pay fines that accrue each day your business goes uninsured.
  • Face felony charges.
  • Go to jail if you are a repeat offender.
  • Pay legal expenses to defend your business in court.
  • Have to pay for your employees’ medical bills out of pocket.

These penalties far outweigh the cost of maintaining adequate coverage. Unless you like playing with fire, be sure to comply with your state’s insurance laws.

How Much Does Workers’ Comp Insurance Cost?

Workers’ Comp premiums depend on several factors, including…

  • Your location.
  • Your industry.
  • The kind of work your employees do.
  • How many employees you have.
  • Your payroll.

For accurate quotes tailored to your business’s specific needs, fill out an online insurance application. Our agents can send competitive quotes from multiple top-rated providers to your inbox (usually within 24 hours!).