Workers’ Compensation Insurance: What It Is, How to Get It

Workers' compensation insurance protects your employees and your business when someone is injured on the job.
Nov 16, 2021

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Workers’ compensation insurance is coverage that pays for employees’ medical expenses after work-related injuries and generally shields companies from employee lawsuits stemming from these injuries.

Most states require some form of workers’ comp insurance for companies with employees, including small businesses, though there are exemptions.

Like other types of business insurance, employers must purchase workers’ comp insurance policies and pay monthly or annual premiums. Most major insurance carriers offer workers’ comp. But in certain states, you’ll purchase coverage from a state entity rather than a private company.

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What does workers' compensation pay for?

This is typically how workers' compensation works and what it pays for, but policies and state regulations can vary. Check your policy and your state’s requirements to see what’s covered.

Note that if your business provides services in multiple states, your policy must meet the requirements for all states in which it operates.

Immediate medical care

Workers’ comp benefits cover the costs for immediate treatment of an employee’s injuries. Commonly covered expenses include hospital and doctor visits, surgeries and medication. These policies might also pay for medical equipment like wheelchairs to help with an employee’s recovery.


For injuries that require an extended recovery period, workers’ comp benefits often cover physical and other therapies to help the employee return to work.

If an employee is unable to return to work due to long-term effects of their injuries, some workers’ comp policies will pay for vocational rehabilitation to train the employee for a new career.

Disability and lost wages

Workers’ comp also makes up for an employee’s lost wages if they are unable to work. This is considered a disability benefit and can be paid out for partial and total disability as well as temporary and permanent disability.

These disability benefits are separate from Social Security disability benefits.

Survivor benefits

If an employee dies because of a work-related injury or illness, workers’ comp provides the employee’s family with financial support to compensate for their lost income. In most cases, it also pays for the deceased employee's funeral expenses.

What isn’t covered by workers' comp insurance?

There are standard situations in which workers’ comp won’t pay for an employee’s medical expenses. A few examples of these situations include when an employee is:

  • Negligent and disobeyed a company policy.

  • Under the influence of alcohol or illegal drugs at the time of the injury.

  • On the premises while voluntarily participating in a wellness program or recreational activity.

  • Eating food that they have prepared for their personal meal.

  • Commuting to or from the work site to their personal residence or for personal reasons.

Who needs workers' compensation insurance?

Each state sets its own rules about which businesses need workers’ comp. In general, whether you will need to purchase workers’ comp depends on:

  • What industry you operate in.

  • How many employees you’ve hired.

  • Your business structure.

If your business is a sole proprietorship, partnership or limited liability company and has no employees outside of the owners, it might qualify for an exemption.

Even if you qualify for an exemption or operate in a state that doesn’t require you to have workers’ compensation insurance, you still might want this coverage. For example, without a workers' comp insurance policy, your company could be sued by an injured employee. If the court finds you at fault for an employee’s injury, the business could take a large financial hit.

Further, most personal health insurance plans have exclusions when it comes to work-related injuries, and workers’ comp insurance can help your business avoid paying out of pocket for employees' medical bills from work-related injuries and illnesses.

If you're a contractor, some companies might require you to have workers’ compensation insurance so you can’t sue them if you are hurt on the job. Workers’ comp will also protect your business if you hire subcontractors and they are hurt while working for you.

How much does workers' compensation insurance cost?

In 2021, workers' comp premiums cost an average of $1 per $100 in payroll, according to The Hartford, an insurance provider.

But how much workers’ comp costs is determined by multiple factors, including the type of work your employees do, business location, number of employees and history of claims.

How do I get workers' compensation coverage?

Workers’ comp is a common policy available through most major insurance providers. You'll need to submit information about your business and employees to ensure you qualify for your requested coverage, and the type of coverage you'll be required to have is determined by the states in which you do business.

In certain states, you’ll need to buy coverage directly from the state office of workers’ compensation. In Ohio, for example, business owners submit an application and security deposit to the state Bureau of Workers’ Compensation. The office reviews their application and issues a policy number. To maintain coverage, business owners must submit a routine payroll report and premium.

In states that allow you to purchase workers’ comp insurance yourself, consider these commercial insurance companies:


When they're a good fit

NerdWallet's take


If you want to take advantage of robust risk management resources.

Travelers offers easy access to workers’ comp claims information for employers, medical professionals and injured employees online. Read our review.

The Hartford

If you want to bundle your workers’ comp coverage with other types of business insurance.

The Hartford’s workers’ comp policyholders have access to a preferred medical provider network when dealing with claims. Read our review.


If you need insurance quickly and want to buy a policy online.

Next says it offers workers’ comp insurance for as little as $14 per month, and policies can be purchased online in minutes. Read our review.

What's the best fit for your business?
Answer a few questions and we'll match you with an insurance partner who can help you secure quotes.
Frequently asked questions

Most states require workers' comp for businesses, but each state has its own requirements and exceptions for who must have coverage.

Workers' comp covers injuries or illnesses that qualify as "work-related," which is determined by the Occupational Safety and Health Administration. Each policy will specify what it does and does not cover.

No. Workers' comp applies when one of your employees is injured on the job. Business liability insurance kicks in when a third party, like a customer, is injured on your premises.

If you don't have workers' comp coverage when an employee is injured while performing their job, you might be liable if a lawsuit finds that you were at fault for the injury and be required to pay for the employee's medical treatment and recovery along with legal expenses. You may also owe state fines.