Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.
Workers' compensation insurance covers costs related to workplace injuries and illnesses, which can escalate quickly due to the high cost of medical care.
While workers’ comp laws vary by state, small businesses typically need a policy in place as soon as they hire their first employee (or a certain number of workers).
Even when not required by law, this policy provides important protection against medical expenses and employee lawsuits related to workplace injuries, such as a slip and fall in the office, an injury from tools or machinery, or an occupational illness.
You can also rely on workers’ comp if you or an employee needs medical treatment or time off due to a workplace injury – or if an injured employee sues you for failing to prevent an accident.
If you don’t carry workers’ comp insurance, your business will be responsible for any medical bills and legal fees. And most states levy costly penalties for noncompliance.
Workers’ compensation insurance covers the cost of immediate medical care for workplace accidents, such as ambulance rides, emergency room visits, surgical procedures, and other medical bills. Ongoing care, such as medication and physical rehabilitation, is also covered.
A serious injury can prevent an employee from returning to work for days, weeks, or even months. Workers’ comp benefits cover part of the wages lost while an employee is recovering from a workplace injury or occupational illness.
When a work-related incident is fatal, workers’ compensation pays death benefits that cover funeral expenses and help support the deceased individual’s family members.
Workers’ compensation insurance typically includes employer’s liability insurance. This type of insurance protects employers from lawsuits related to work injuries.
For instance, a worker might claim that a lack of basic workplace safety led to their injury. If the worker sues their employer, this coverage would pay for:
Workers’ compensation insurance policies cost an average of $45 per month. This is based on the median cost of workers' comp insurance. 23% of Insureon's small business customers pay less than $30 per month for this policy.
Your workers' comp cost is calculated based on a few factors, including:
Each state has unique workers' compensation laws and penalties. In most states, workers' comp is required as soon as a business hires its first employee. Other states don’t mandate coverage until a business has two, three, four, or more employees.
Texas and South Dakota are the only states where business owners are never required to purchase workers’ compensation insurance coverage.
All other states impose penalties for not carrying workers’ compensation. These can range from fines to jail time – or both.
Most states allow business owners to buy workers’ compensation insurance from private insurers or use self-insurance plans. North Dakota, Ohio, Washington, and Wyoming require employers to purchase workers’ comp insurance through a state fund.
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Insureon helps a wide range of businesses get the coverage they need from top-rated U.S. insurance companies. Complete our easy online application to get free insurance quotes.
Our expert insurance agents can help you choose the best workers' compensation coverage that meets the needs of your small business.
You’ll typically be able to get coverage quickly and receive a copy of your workers' compensation insurance certificate on the same day.
Typically not by law. States generally require businesses with employees to purchase workers' compensation insurance.
But sole proprietors, independent contractors, single member limited liability companies (LLCs), and other self-employed business owners with no employees may buy this policy to fulfill the terms of a contract. Your clients don’t want to deal with the expense and hassle of a workplace injury. That’s why they might require contractors who work for them to carry their own business insurance, including workers' comp.
In addition, workers' comp helps to protect your income. Most health insurance policies exclude coverage for work-related injuries and illnesses. If you carry workers' comp as an independent contractor, your medical bills will be covered when you’re injured on the job.
Workers' comp can also partially replace wages lost while taking time off to recover from a work-related injury.
If an employee is under the influence of alcohol or drugs and gets injured due to intoxication, workers' compensation benefits would not apply.
In addition, if an employee does not follow company policies, such as wearing a hard hat when working with heavy equipment, and hurts themselves, they are not entitled to workers' compensation benefits.
If an employee gets injured or makes claims of injury after experiencing a termination (including being fired or laid off), they are not eligible for workers' compensation benefits. A worker must be an active employee at a company in order to receive workers' compensation coverage.
If your employee is unable to work due to injury and you have to bring on a replacement worker, workers' compensation would not cover the replacement worker's salary. The injured employee would still be entitled to wage loss benefits.
OSHA requires workplaces that operate heavy machinery, such as manufacturers, to follow set safety guidelines. In the event that an employee gets injured for not following OSHA safety procedures, the company may receive non-compliance fines that would not be covered by workers' comp.
Yes, most workers’ compensation policies include death benefits. These help a deceased employee’s loved ones and dependents pay funeral and burial costs after a fatal workplace accident.
Workers’ comp can also provide financial assistance for the deceased employee’s family.
In many states, yes. Most workers’ compensation policies include employer’s liability insurance to protect your business if an injured worker files a lawsuit against you for not preventing a workplace accident.
Business owners in North Dakota, Ohio, Washington, and Wyoming do not have employer’s liability insurance included in workers’ comp.
In these states, workers’ comp policies are purchased from monopolistic state funds, which do not offer this coverage. Insurance companies sell stop gap coverage to protect you from employee lawsuits.
To save money on workers' comp, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.
In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of an estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.
In addition, some business owners may be eligible for a minimum premium workers' compensation policy, which sets your premium charges at the minimum premium (i.e., the smallest amount of money that an insurance company will sell to a business). Small businesses that benefit from this type of policy often have few risks and a small number of employees.
Finally, businesses with a good Experience Modification Rating (EMR) and a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.
Both policies deal with bodily injuries. General liability insurance protects your company when a client or another third party suffers an injury on your property and sues for medical expenses.
Workers’ comp insurance covers expenses resulting from employee injuries sustained while working.
Learn more about the difference between general liability and workers’ compensation insurance.
It typically depends on where an employee contracted COVID.
Workers' comp insurance protects employees from on-the-job injuries and illnesses. If an employee is exposed to the coronavirus because of their job, then this policy should provide coverage.
For example, a nurse caring for sick patients or a grocery store worker who deals directly with the public would both have a stronger claim than an office worker. Workers’ comp doesn't cover diseases unrelated to employment.
Your state's laws could potentially help cover costs related to COVID-19. If you think you might be eligible for a workers' compensation claim, contact your insurance agency’s claims department.
If you want to learn more about this policy, you can find additional answers in our frequently asked questions about workers' compensation insurance.
If there are any additional questions you have about coverage, you can also contact an Insureon agent.