Workers Compensation Insurance

What is Workers Compensation Insurance?

Thousands of employees contract work-related illnesses and sustain work-related injuries every year, and many of these illnesses and injuries are significant. Lots require medical treatment, and some prove to be fatal. Workers compensation insurance is a form of insurance that helps both employees who suffer work-related illnesses or injuries, and their employers.

Employers can often be held responsible for illnesses and injuries that employees suffer while on the job. In many cases, an employer may be asked to both cover an employee’s medical bills and provide compensation for the employee’s lost wages. These are expenses that could significantly hurt most business’ finances, with serious illnesses and injuries possibly bankrupting some businesses.

Workers compensation insurance helps businesses prepare for this potential risk. The insurance offers coverage for employees who become ill or injured while at work, usually covering both medical bills and a portion of wages that are lost due to the illness or injury.

In providing coverage for ill or injured employees, workers comp insurance serves the interests of both employees and employers. Employees don’t need to worry about whether they’ll be fairly compensated if they suffer a work-related illness or injury, and employers don’t have to worry about an illness or injury bankrupting their business.

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Workers Compensation Insurance

Who is Covered by Workers Compensation Policies?

Who workers comp policies cover is usually determined by people’s relationship to a business:

  • Employees are usually covered regardless of their position or how many hours they work
  • Owners may be covered depending on how involved they are with the business’ daily operations
  • Contractors normally aren’t covered, but there are a few uncommon scenarios where they might be covered
  • Vendors and customers generally aren’t covered by workers comp insurance
Exactly who is covered by a particular business’ workers comp insurance is determined by the laws of the state the business operates in and the terms of the business’ workers comp policy.

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What Businesses Need Workers Compensation Coverage?

Most businesses that have employees should consider getting workers compensation coverage, for few businesses could afford a major work-related illness or injury claim. In many cases, businesses that have employees are required by state law to obtain coverage.

Does Workers Comp Insurance Stop Employees From Suing?

Carrying workers comp insurance usually doesn’t make it impossible for employees to sue over worker-related illnesses or injuries, but it greatly deters them from filing such lawsuits. At the time that employees file a workers comp claim, they usually waive their right to sue over the incident. Thus, employees normally can’t both file a claim and sue their employer.

While employees can theoretically sue employers over work-related illnesses and injuries, the vast majority of employees who become ill or injured on the job choose to file a workers comp claim instead. They usually do this because filing a claim is fast and promises fair compensation, and lawsuits can be uncertain ventures.

Workers Compensation Insurance

What Factors Affect Workers Compensation Policies’ Premiums?

Workers compensation premiums are based on a number of different factors. A few of the items insurers may consider when underwriting policies include the:

  • Size of a business’ workforce
  • Average salary of a business’ employees
  • Industry a business operates in
  • Past claims history of the business

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How Can Businesses Get Workers Compensation Insurance?

States have slightly different ways for businesses to purchase workers compensation insurance. Some states have a state-run marketplace, others have a private marketplace and still others have a hybrid of the two. For help determining which of these three options are available to a business, business owners should contact an independent insurance agent who is licensed in their state. An independent agent will know what markets are offered in a state, and they’ll be able to request quotes for policies that are available to a business.

Meet Your Industry Specialist

Jeff Kroeger

Principal, Senior Vice President, and Head of Commercial Lines, Mr. Kroeger also manages the company's hospitality book of business and is that unit's primary producer. He is a graduate of Montclair State University and was named a 2015 Young Gun Insurance Business America.

Jeff has been providing exceptional insurance for restaurants, bars, nightclubs, and more for many years. He understands the unique challenges this industry faces and delivers the right coverage at an affordable price.

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