The Small-Business Owner's Guide to Workers' Compensation Insurance

Workers' Compensation Insurance FAQ

Not every small-business owner has the time to read through an entire eBook about Workers' Compensation Insurance. That's why we've taken the most frequently asked Workers' Comp questions and answered them here — as concisely as possible — for your reference. Take a look:

Do I need to cover all employees with Workman's Comp?

Generally speaking, yes. Most individuals providing services to a for-profit business are considered employees under Workers' Comp laws and must be insured. However, these stipulations vary based on where your business is located. For example, some states don't require you to cover farm workers, domestic employees, and seasonal or casual workers. But if you employ full- or part-time employees or subcontractors, know that most states require you to provide adequate Workers' Comp coverage.

Which occupational injuries and illnesses are covered?

Workman's Comp covers most occupational injuries and illnesses, but there are some exceptions. Benefits may be denied in situations involving…

  • Injuries that happened while the employee was intoxicated.
  • Self-inflicted injuries (e.g., an employee who starts a fight and gets wounded).
  • Injuries suffered while an employee was not working.
  • Illnesses unrelated to the employee's work (e.g., hereditary diseases).
  • Injuries suffered while an employee was violating company policy.

Can an employee collect Workers' Liability benefits and sue me?

An injured employee can only sue you if they waive their Workers' Comp benefits offered by your business. If they do sue you for punitive damages, pain and suffering, and mental anguish, your Employers' Liability Insurance (included in most Workers' Compensation plans) covers your business's legal expenses.

Why do I have to carry Workers' Comp?

Unlike other small business insurance policies, Workers' Compensation Insurance is regulated at the state level. So while you may be able to (legally) forgo General Liability Insurance, chances are that if you have employees, your state requires you to carry Workers' Compensation coverage. Failure to adhere to your state's Workers' Comp laws can lead to expensive fines and, in some states, criminal charges.

Which states require employers to carry Workers' Compensation Insurance?

All states require employers to have Workers' Comp coverage except for Texas. For some states, the mandate doesn't kick in until you hire a certain number of employees (e.g., in Florida, you must carry coverage if you have four or more employees). In other states, you must have the coverage in force if you hire a single employee (e.g., California). To learn more about your state's regulations, check out our guide Workers' Compensation Insurance Laws by State.

Where can I purchase Workers' Comp Insurance?

Some states run monopolistic insurance pools, which means you must purchase your Workers' Comp coverage through the state fund (as in Ohio). Other states give you the option of purchasing from their fund or a private insurance company. You can find insurance for your business by contacting one of insureon's specialized small-business agents.

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