What is it?

What is workers’ compensation insurance?

Workers’ compensation insurance (often called “workers’ comp”) helps protect both employees and employers if a worker becomes injured or ill on the job. It covers medical expenses, lost wages, and rehabilitation costs. It can also provide disability benefits or death benefits to the family in case of a fatal work-related incident.

What does it cover?

Workers’ compensation insurance typically covers:

• Medical Expenses: Hospital stays, surgeries, doctor’s visits, and other healthcare needs related to a work-related injury or illness.
• Lost Wages: Partial wage replacement for employees who are unable to work due to an on-the-job injury or illness.
• Rehabilitation Costs: Physical therapy, vocational retraining, or other rehabilitation services necessary for the employee to recover and return to work.
• Disability Benefits: Depending on the severity and permanence of an injury, employees may receive temporary or permanent disability benefits.
• Death Benefits: In the event of a work-related death, workers’ compensation can provide financial support to the employee’s dependents.

Who Needs it?

• Most Employers: In almost every state, businesses with one or more employees are required by law to carry workers’ compensation insurance. Requirements can vary, so check your local regulations.
• High-Risk Industries: Construction, manufacturing, and other high-risk fields have a particular need for robust coverage due to the greater likelihood of workplace injuries.
• Small Businesses: Even small businesses with a few employees generally need coverage. Not only is it mandated in most places, but it also protects you from potentially significant financial and legal consequences.

How much is it?

Payroll and Industry Risk: Workers’ comp premiums are usually calculated based on your total payroll and the inherent risk level of your industry. For instance, an office environment typically has lower premiums than a construction site.

• Claims History: If your business has had frequent or severe claims in the past, you may face higher premiums.
• Location: Each state has its own regulations and rate structures, so costs can vary significantly based on where your business operates.
• Safety Programs: Implementing safety measures, providing employee training, and maintaining a safe workplace can help reduce both the likelihood of injuries and your insurance costs.