Workers’ comp insurance

Workers’ comp insurance is a type of business insurance that pays for medical expenses and lost wages when employees, such as construction workers or nurses, suffer job-related injuries. U.S.

Law in 49 states requires most businesses with employees, including restaurants and manufacturing plants, to carry workers’ comp coverage by statute. Workers’ comp policies cover injuries such as fractures, carpal tunnel syndrome, or slip-and-fall accidents occurring at workplaces like warehouses or offices.

Employers file claims directly with their insurer after incidents like forklift crashes or repetitive strain among assembly line staff. Insurers pay benefits that may include surgery costs, physical therapy bills, or disability payments based on state formulas such as California’s average weekly wage cap of $1,620 in 2024.

Workers’ comp does not cover non-work illnesses, such as the flu caught outside the workplace or pre-existing back injuries unrelated to work activities. Premiums depend on factors like annual payroll size–$250,000 versus $50,000–and risk classification codes assigned by bodies such as NCCI for industries like roofing (Class Code 5551) or clerical work (Class Code 8810).

Self-employed individuals generally are not required to buy workers’ comp unless they hire staff or contract with clients mandating proof of coverage. Businesses may face fines up to $100,000 in states like New York if they lack required workers’ comp insurance after workplace accidents, according to the Insurance Information Database.

Coverage starts immediately on an employee’s first day if they complete hiring documents and are listed on payroll records. Workers’ comp only covers employees–independent contractors like freelance graphic designers must secure their own occupational injury protection if desired.