Workers Compensation Insurance
Workers’ compensation insurance helps cover medical costs and lost wages for job-related injuries or illnesses. Most states require businesses with employees to have this policy.
Choose the right coverage from trusted insurance providers.
Why Small Businesses Need Workers' Compensation
Workplace injuries like a slip and fall, needlestick accident, or accidents involving tools and machinery can lead to expensive medical care, lost work, and employee lawsuits. A workers’ comp policy helps small businesses cover medical bills, provide medical treatment, and protect against legal claims if an injured employee sues for failure to prevent an accident.
Many states enforce strict workers’ comp laws, requiring coverage when hiring the first employee or reaching a certain number of workers. Even when not mandated by law or a governing body like the Department of Labor, skipping insurance risks costly penalties for noncompliance. The high cost of injuries makes industrial insurance essential for protection against healthcare expenses and legal fees.
Workers’ comp is crucial for small businesses
- Most states require it.
- It covers medical expenses and lost wages for job-related injuries.
- It helps with employee lawsuit costs related to workplace injuries.
Additional Coverages to Consider
Protect your business from unexpected risks with these essential coverages:
General Liability Insurance
Covers customer injuries, property damage, and advertising claims. Helps with legal costs and is often required for leases and contracts.
Under this plan
Customer injuries
Business interruption incidents
Accidental damage to customer property
Workers’ compensation insurance
Covers medical expenses and lost wages for work-related injuries or illnesses. Required in most states for businesses with employees.
Under this plan
Employee medical expenses
Disability benefits
Workplace injury lawsuits
Commercial auto insurance
Protects business vehicles by covering accident-related legal costs, medical bills, and property damage.
Under this plan
Car accidents
Vandalism and theft
Weather damage
Cyber insurance
Covers expenses from cyberattacks, data breaches, and legal fees, ensuring your business stays secure online.
Under this plan
Data breach investigations
Customer notification expenses
Fraud monitoring services
What does workers' compensation insurance cover?
Medical Expenses
Workers’ compensation covers the cost of immediate medical care, including ambulance rides, doctor visits, emergency room treatment, surgeries, and medications. It also covers ongoing care like physical therapy and rehabilitation to help injured employees recover.
Disability Benefits
If a work-related injury or illness prevents an employee from working for an extended period, workers’ comp provides partial wage replacement. Whether the injury causes temporary or permanent disability, this coverage helps employees manage financial burdens while recovering.
Compensation for Fatal Injuries
In the unfortunate event of a fatal workplace accident, workers’ compensation provides death benefits. These benefits help cover funeral expenses and offer financial support to the deceased worker’s family.
Lawsuits Related to Workplace Injuries
Workers’ compensation includes employers’ liability insurance, which protects businesses if an employee sues over unsafe working conditions. It covers attorney fees, court costs, and settlements, ensuring businesses can defend themselves against legal claims.
How much does workers’ compensation insurance cost?
On average, workers’ compensation insurance costs around $45 per month, with 23% of small businesses paying less than $30 per month.
The exact cost depends on several factors, including payroll, business location, number of employees, industry risk, coverage limits, and past claims history.
Is Workers’ Compensation Insurance Required by Law?
Workers’ compensation laws vary by state, but most require coverage once a business hires its first employee. Some states set the limit at two, three, or more workers, with exemptions for certain professions like real estate agents and agricultural workers.
While Texas and South Dakota don’t mandate coverage, all other states enforce penalties for noncompliance, including fines or jail time. Businesses can usually purchase workers’ comp insurance from private insurers or opt for self-insurance, except in North Dakota, Ohio, Washington, and Wyoming, where it must be bought through a state fund.
Do Self-Employed Owners and Contractors Need Workers’ Comp?
Most states don’t require workers’ comp for self-employed business owners or independent contractors unless they have employees. However, some clients may require it for contracts.
In hazardous industries, states like California mandate coverage for all workers, even sole proprietors. Since health insurance often excludes workplace injuries, carrying workers’ comp ensures medical bills are covered and provides income protection during recovery.
What Workers’ Compensation Insurance Does Not Cover
Injuries from intoxication or drugs
If an employee is under the influence of alcohol or drugs and gets injured, they won’t receive workers’ comp benefits.
Violations of company policies
Injuries caused by breaking workplace rules are not covered.
Injuries after termination
If a worker claims an injury after being fired or laid off, they are usually not eligible for workers’ comp.
Wages of a replacement worker
If you hire someone to cover for an injured employee, their salary is not covered.
OSHA fines
If a company violates workplace safety laws and faces penalties, workers’ comp won’t pay for them.
How to get workers’ compensation insurance
Eagle Nation connects small businesses with top-rated U.S. insurance carriers for workers’ comp coverage. Fill out a quick online application to get free quotes. Our expert agents help you choose the right policy, and you can often receive your insurance certificate on the same day.
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Verified workers' compensation insurance reviews
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FAQs about Workers' Compensation Insurance
Death benefits
Workers' comp helps cover funeral and burial costs for employees who pass away due to workplace accidents.
Financial support
It provides assistance to the deceased employee’s family and dependents.
- Yes, in most states – Workers' comp includes employer’s liability insurance, covering lawsuits related to workplace injuries.
- Exceptions – In North Dakota, Ohio, Washington, and Wyoming, workers' comp must be bought from a state fund and does not include liability coverage. Businesses in these states can purchase stop-gap coverage for protection.
- Classify employees correctly – Desk jobs and low-risk roles cost less to insure.
- Consider pay-as-you-go plans – Pay based on actual payroll, reducing upfront costs.
- Look into minimum premium policies – Ideal for businesses with low risk and few employees.
- Maintain a strong safety program – A good Experience Modification Rating (EMR) lowers premiums.
- General Liability Insurance – This covers injuries to clients or third parties on your property and legal costs if they sue.
- Workers' Comp Insurance – Covers medical expenses and lost wages for employees injured on the job.
"As a small business owner, I appreciate how workers' compensation insurance covers medical bills and lost wages for injured employees. It gives me peace of mind knowing that my business and employees are protected from unexpected accidents."