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What is Workers Compensation Insurance?
Workers compensation insurance protects your employees and your business from work-related accidents, illnesses, and even death. Nearly every state requires that employers have insurance to cover medical costs and lost wages for workers who are injured or become ill on the job. If you don’t carry workers compensation insurance, you could be liable for these costs, and be subject to fines or penalties by the state.
Workplace injuries happen even in the safest of workspaces. Even if your employee has health insurance, you are responsible for their medical costs if they suffer a job-related injury or illness. In addition, the worker is entitled to a percentage of their regular wages during the time that they are unable to work due to their injury or illness. These costs are covered by workers compensation insurance. If you don’t have insurance, you will have to pay these costs out of pocket.
You need Workers Comp Insurance if your business:
- Is ready to hire your first employee
- Has one or more full time employees
- Has one or more part-time employees (in most states)
How does Workers Compensation work?
The cost of workers comp insurance is paid by the employer. It is simply a cost associated with having one or more employees. Unlike other kinds of insurance for employees, like health insurance, the cost of workers compensation is not shared between the employer and the employee.
While the employer must bear the cost of workers compensation insurance, consider what would happen if your company was not insured. You would likely still be required, under state law, to cover your employee’s medical costs and lost wages in the event of a work-related accident, illness or death. In addition, you would be subject to fines or penalties from the state if you were not insured.