Why do I need workers compensation insurance?
Because it’s the law! Depending on your state, you are bound by specific obligations designed to protect your employees if they are hurt on the job.
The states go about enforcing this idea in different ways but most require employers to purchase an insurance policy that can help an employee who is hurt on the job and can’t work. Many states also set minimums to insure against lawsuits from employees following a workplace injury.
Companies are generally required to have workers compensation insurance in place for all “employees.” Founders: if you’re taking payroll, this could mean you too! Depending on state law and the structure of your company, there may be no distinction between the workers comp requirements for managerial vs standard employees. Anyone on the payroll would have to be covered.
Only a handful of states (known as “monopolistic” states) administer their own mandatory workers comp program in which employers automatically participate. This means that, odds are, you’ll have to obtain the coverage yourself from the private market.
What is it?
Workers compensation insurance covers your company’s employees in the event that they get injured while at work and can’t perform their job. This policy really benefits the employees rather than the company because it will compensate the injured employee for lost wages and medical expenses.
Employer’s liability coverage is required in some states and is often built into the policy alongside workers compensation coverage. This provides a specified limit to pay for the defense and settlement of employee’s lawsuit against you after they are hurt in a workplace accident. (Not to be confused with employment practices liability insurance which is focused on employment disputes unrelated to bodily injury)
How do I protect myself and my company?
Want to read more on the subject? Check out our blog posts on workers compensation insurance.
Read about other types of coverage