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Expert answers to all your business insurance questions.

What is workers' comp insurance? How does it work?

Workers’ compensation insurance is a policy that protects your employees in case they are ever hurt on the job. It’s often called workers’ comp for short. If your employee gets injured or sick because of their work, workers’ comp insurance will cover things like wage replacement and medical expenses for the injured person.

(See more about what workers’ comp covers.)

Workers’ comp is a really important coverage to protect workers from financial hardship, which is why it’s required almost everywhere (every state except Texas). And workers’ compensation insurance also protects your business, because when an injured employee claims workers’ compensation benefits, they give up their rights to sue you, the employer, for financial damages.

So, basically? Workers’ compensation insurance is a great bargain for everyone. (And if you have employees, you really do need it.)

What do employers need to know about workers’ comp?


In most states, you’ll need to purchase a workers’ compensation policy as soon as you hire your first employee. It’s required.

Luckily, workers’ compensation insurance is one of the simplest policies to buy. That’s because you don’t have to decide your limits—they’re decided by the government of your state. So there are no big decisions for you to make.

To get workers’ comp coverage, all you need to do is provide information about your business, get a quote, and purchase a policy.

(Have an injured employee and need guidance? Here’s what you should do if an employee is injured.)

What does an employee need to know about workers’ comp?


Employee? Hey, there. You probably don’t need to think about workers’ comp unless you get injured at work.

If you are injured at your job, though, it’s important to know that workers’ compensation will cover your injury whether or not the incident was your fault (unless you were violating safety rules, under the influence of drugs or alcohol, or committing a crime).  Also, if you find yourself with a job-related injury that needs quick attention, go to the nearest emergency room right away and inform the staff that your injury is work-related (so you don’t get a bill).

Another thing to know: in the case of a work accident, your employer is required by law to report the incident to their insurer and get the workers' comp process started. If this doesn't happen, you should contact the authorities in your state.

After your employer submits all the paperwork, their insurer will make a decision on your claim and let you know as soon as possible.

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Disclaimer

All content on this page is for general informational purposes only and does not apply to any specific case, is not legal, tax or insurance advice and should not be relied upon. If you have any questions about the situation for your small business or the latest information in your state, you should contact an attorney for legal advice, an insurance agent or broker, and/or your state's labor or industry agency, board, commission or department. Please note that the information provided on this page may change at any time as a result of legislative action, court decisions or rules adopted or amended by any state or the federal government.