What Is Workers’ Compensation Insurance?

Workers’ Compensation Insurance is designed to provide benefits when an employee suffers a covered injury or illness arising out of their employment.

Unlike many other types of business insurance, Workers’ Compensation focuses primarily on employees and workplace-related injuries or illnesses.

Coverage and requirements are governed largely by state law, which means who must carry Workers’ Compensation and what benefits are provided can vary depending on where a business operates.​​

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Who Needs Workers’ Compensation Insurance?

Many businesses with employees are required to carry Workers’ Compensation Insurance, but exact requirements vary by state.

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Coverage may be particularly important for businesses that:

• Employ W-2 workers

• Operate in physically demanding industries

• Have employees working at customer locations

• Use tools, machinery or equipment

• Have employees driving or traveling for work

• Operate restaurants, warehouses or retail locations

• Have employees exposed to repetitive physical tasks or occupational hazards

 

Industries commonly purchasing Workers’ Compensation include:

• Contractors

• Construction companies

• Restaurants

• Hospitality businesses

• Cleaning companies

• Landscaping businesses

• Retail businesses

• Property management companies

• Professional services

• Manufacturing

• Warehousing

 

Not sure whether Workers’ Compensation is required for your business?
A licensed insurance agent can help you understand the requirements that may apply to your business and state.

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What Does Workers’ Compensation Insurance Cover?

1. Medical Expenses

Workers’ Compensation may help pay for necessary medical treatment resulting from a covered work-related injury or illness.

This can include expenses such as:

• Emergency room visits

• Doctor appointments

• Surgery

• Prescription medication

• Hospital care

For example, if an electrician injures their hand while working at a customer’s property, Workers’ Compensation may help cover eligible medical treatment.

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2. Lost Wages

When an employee cannot work because of a covered work-related injury or illness, Workers’ Compensation may provide partial wage replacement while they recover.

The amount and duration of benefits vary according to applicable state law and the circumstances of the claim.

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3. Ongoing Care and Rehabilitation

Some workplace injuries require treatment beyond the initial medical visit.

Workers’ Compensation may help cover eligible ongoing care such as:

• Physical therapy

• Rehabilitation

• Follow-up treatment

• Other medically necessary care

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4. Disability Benefits

A workplace injury may temporarily or permanently affect an employee’s ability to work.

Depending on the circumstances and applicable state law, Workers’ Compensation may provide disability benefits to eligible employees.

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5. Occupational Illness

Workers’ Compensation may also cover certain illnesses that develop because of workplace conditions or occupational exposure.

Examples can include illnesses resulting from certain chemicals, allergens or other workplace hazards.

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6. Death Benefits

If a covered work-related injury or illness results in an employee’s death, Workers’ Compensation may provide benefits to eligible dependents and may help cover certain funeral expenses.

Benefits vary by state.

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Common Workers’ Compensation Claims

Slips, Trips and Falls

An employee slips on a wet floor, trips over equipment or falls while performing work-related duties.

Read more → Workplace Slip and Fall Claims

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Lifting and Overexertion Injuries

Employees may suffer back, shoulder or other injuries while lifting, carrying or moving heavy objects.

Read more → Common Lifting Injuries at Work

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Cuts, Burns and Equipment Injuries

Employees working with tools, machinery, cooking equipment or other workplace equipment may suffer cuts, burns or other injuries.

Read more → Workplace Equipment Injury Claims

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Repetitive Motion Injuries

Some injuries develop gradually rather than from a single accident. Repetitive movements may contribute to conditions such as carpal tunnel syndrome or other musculoskeletal injuries.

Read more → Are Repetitive Motion Injuries Covered by Workers’ Comp?

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Occupational Illness

Certain workplace exposures may contribute to occupational illnesses that develop over time.

Read more → What Is an Occupational Illness?

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What Isn't Typically Covered?

Workers’ Compensation does not automatically cover every injury involving an employee.

Depending on state law and policy terms, situations that may not qualify for benefits can include:

• Injuries unrelated to employment

• Certain intentionally self-inflicted injuries

• Certain injuries occurring while an employee is intoxicated

• Injuries resulting from activities outside the scope of employment

• Certain independent contractor injuries

• Claims that do not meet applicable state Workers’ Compensation requirements

Eligibility and exclusions vary significantly by state and circumstances.

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A licensed insurance professional can help you understand the coverage available for your business, while questions about a specific claim may need to be addressed by the carrier or appropriate professional.

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Workers’ Compensation vs. General Liability

What's the Difference?

Both policies can involve injuries, but they generally protect against different types of risks.

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Workers’ Compensation
Primarily provides benefits for employees who suffer covered work-related injuries or illnesses.

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General Liability
May protect the business against covered claims involving bodily injury or property damage to third parties, such as customers, vendors or members of the public.

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For example:

Employee slips in the restaurant kitchen and is injured → Workers’ Compensation

Customer slips in the restaurant dining area and is injured → General Liability

Read more → Workers’ Compensation vs. General Liability Insurance

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What Affects the Cost of Workers’ Compensation Insurance?

The cost of Workers’ Compensation Insurance depends on several factors, including:

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• Number of employees

• Payroll

• Employee job classifications

• Industry

• Type of work performed

• Location

• Claims history

• Workplace risk

• Experience modification factor, when applicable

• State requirements

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Businesses with employees performing higher-risk work may generally pay more than businesses whose employees perform primarily lower-risk office work.

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Because Workers’ Compensation pricing depends heavily on payroll and employee classifications, providing accurate business information is important when obtaining coverage.

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How Can Businesses Reduce Workplace Injuries?

Workers’ Compensation provides financial protection after covered workplace injuries occur, but preventing injuries in the first place is equally important.

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Businesses can help reduce workplace risks by:

• Establishing clear safety procedures

• Providing appropriate employee training

• Maintaining tools and equipment

• Using appropriate protective equipment

• Addressing workplace hazards promptly

• Keeping work areas clean and organized

• Documenting workplace incidents

• Reviewing safety procedures as the business grows

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A strong workplace safety program can help protect employees while reducing operational disruptions caused by workplace injuries.

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Ready to Protect Your Employees and Your Business?

Workplace injuries can happen even when businesses take safety seriously.​

The right Workers’ Compensation coverage can help protect employees while helping your business manage the financial risks associated with work-related injuries and illnesses.​

We'll help you understand your coverage options and find a policy suited to your business.

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