Workers’ Compensation Insurance

• State law requires most employers to carry it, as the state facts below describe.
• It pays for the injured person’s care and part of their wages, whoever was at fault.
• In exchange for those benefits, an injured employee generally may not sue you over the injury.

Who Needs It

• Any business with employees.
• Contractors who hire subcontractors, because an uninsured sub’s workers can be treated as yours.
• Owners and partners deciding whether to cover themselves, as the state facts below describe.

A workers’ compensation policy has two parts. The first pays the benefits state law sets for an injured employee. The second protects you if an employee sues you anyway.

Medical care.

Pays the injured employee’s medical expenses and rehabilitation costs. For example, a cook burns a hand on the fryer and needs treatment and therapy.

Lost wages and death benefits.

Replaces at least part of the wages an injured employee loses, and pays a funeral benefit if an employee is killed on the job. For example, a roofer with a broken ankle is off work for six weeks.

Illness from the work.

Covers certain illnesses and occupational diseases, not only accidents, on the premises or anywhere the job takes them. For example, a painter develops a breathing illness linked to the work.

Employers liability.

Covers you when an employee sues you over a work related injury or illness, up to its own monetary limit. For example, the spouse of an injured worker sues for loss of consortium, meaning loss of companionship.

The National Association of Insurance Commissioners says workers’ compensation protects a business owner from claims by employees who have a work related injury or illness. The policy itself governs the details.

Workers’ compensation is built for your employees and their work. These fall outside it:

Independent contractors.

Under some laws they are not your employees. Most states treat an uninsured contractor or subcontractor, or their workers, as yours, so ask each one for a current certificate.

The drive to and from work.

Commuting accidents are generally not covered.

Work in states not named.

A policy covers claims only in the states it names.

Injuries to customers and visitors.

Those claims go to general liability insurance.

There is no single price. The premium is built from your payroll and the work your people do, then adjusted for your record:

What your people do.

Each classification carries a rate based on the duties employees perform, so a roofing rate is higher than a clerical rate.

Your payroll.

The state approved rate is applied per $100 of payroll.

Your claims record.

An experience modification compares your own payroll and loss records, usually the latest three years, with those of similar employers. A better record earns a credit, and a worse record carries a debit. The number of claims weighs more than their size.

Getting the details right.

Check that you are in the right classification and that payroll is figured correctly for overtime.

To start a quote, tell us who works for you and what they do.

Part One.

The benefits state law requires, with no ceiling on the policy amount.

Part Two.

Employers liability has a monetary limit, stated on the policy.

Benefits are reviewed.

State legislatures review and vote on workers’ compensation benefits each year.

In place of a lawsuit.

Workers’ compensation is the employee’s exclusive remedy for workplace injuries, in exchange for state mandated benefits.