How Much Is Workers' Compensation Insurance?

The cost of workers' compensation insurance depends on the type of business the insured has and the type of coverage the insurer offers. The typical rate for workers' compensation is based on the number of full-time equivalent employees.

Some employers that are self-insured may have their own insurance company as a captive.

If you are a sole proprietor, your state may require that you carry workers' compensation insurance. If your company has fewer than 20 full-time equivalent employees, you may be able to use a personal policy that is much cheaper than a commercial policy.

If you have more than 20 full-time equivalent employees, your commercial policy will probably be the most expensive option.

How Does Workers' Compensation Work?

Workers' compensation is a mandatory coverage that protects businesses against claims for injuries suffered by employees.

The injured worker files a claim with the state workers' compensation agency. The agency pays the medical bills, temporary disability and, in some states, permanent disability. The worker and the employer may agree on an amount to pay for future medical care. The insurer also pays any lost wages.

Who is Covered Under Workers' Compensation?

Workers' compensation is available to most employees who are injured or disabled on the job. Some employers, however, may have a special policy that excludes certain groups of workers, such as supervisors and executives.

Who Needs Workers' Compensation Insurance?

Workers' compensation is designed to help injured employees recover and to make sure that the employer can pay medical bills and other costs.

The benefit of workers' compensation is that the employer's obligation is limited to the cost of workers' compensation insurance and the amounts the insurer agrees to pay. This means that employers do not have to pay anything for medical treatment, rehabilitation, or long-term care.

What Are the Benefits of Workers' Compensation?

A benefit of workers' compensation is that it is very inexpensive. The insurance premium is usually based on the number of full-time employees.

Because the employer is not responsible for paying the injured worker's medical bills, the workers' compensation system allows the company to keep more of its profits.

What are the Downsides of Workers' Compensation?

A disadvantage of workers' compensation is that the injured employee may receive less in benefits than he or she would if the employer had purchased private health insurance.

In many states, injured employees can sue the employer for negligence in court.

Some employees are unhappy with the workers' compensation system because they believe the insurer is slow to pay benefits.

What Happens to My Business if I Don't Carry Workers' Compensation?

Many small businesses have little or no workers' compensation coverage. If you don't carry workers' compensation, you could lose customers and clients.

Why Should I Carry Workers' Compensation?

Workers' compensation protects your business from potential claims by employees. If an employee is injured at work, he or she is covered by the workers' compensation system.

If an employee's injury is serious enough, he or she may file a lawsuit in court. However, the worker must wait to collect damages until after the lawsuit is resolved.

You could also be held liable for the damages suffered by the employee.

Some employers who are self-insured may have their own insurance company as a captive.

Some people are unhappy with the workers' compensation system because they believe that the insurer is slow to pay benefits.

Is Workers' Compation Safe?

There is no federal law requiring that employers carry workers' compensation insurance.

Your state's workers' compensation insurance agency should be able to answer any questions about the safety of workers' compensation.

Should I Be Concerned About Workers' Compensation Insurance?

While it is important to carry workers' compensation insurance, it's not the only protection you need.

The best way to protect yourself against any liability arising from workplace accidents is to adopt a safe working environment.

Employers must provide a safe workplace and follow all state and federal regulations.