The Ultimate Guide to Workers Comp Insurance for Small Businesses

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Workers' comp insurance provides medical care and/or cash benefits for employees who sustain work-related injuries.

As a small business owner, you need to know the ins and outs of workers' comp insurance so that you can protect your employees and yourself as an employer.

The guide below discusses everything you need to know about workers' comp insurance for small businesses.

Everything You Need To Know About Workers' Comp Insurance for Small Businesses

1. What Is Workers' Comp Insurance?

Workers' comp insurance covers medical costs and provides cash benefits to employees who sustain work-related injuries or develop work-related illnesses.

The costs covered and benefits provided to employees are covered and provided without regard to fault and can include medical expenses, lost wages, and disability benefits.

2. What Does Workers' Comp Insurance Cover?

Workers' comp insurance covers injuries sustained on the job site and illnesses caused by workplace factors.  It also covers funeral expenses and other compensation costs to the worker and their kin.

3. How Does Workers' Comp Insurance Work?

If one or a few of your employees get injured while performing work duties, they can file a workers' comp claim. Next, your carrier will investigate the claim and determine whether the employee(s) are eligible for benefits.

If your insurance carrier approves the claim, the employee(s) will receive benefits to cover medical expenses, lost wages, or rehabilitation costs.

4. Who Needs Workers' Comp Insurance?

Small businesses with employees and small businesses without employees both need workers' comp insurance.

Small Businesses with Employees

If you have employees, you are legally required to carry workers' compensation insurance. Paying for employees' work-related injuries out-of-pocket can bring your business to its knees; therefore, getting workers' comp insurance can help you avoid financial loss of this magnitude.

Small Businesses without Employees

If you do not have employees, you are not legally required to carry workers' comp insurance. Even though that is the case, it is still a good idea to invest in workers' comp insurance for subcontractors.

Why Get Workers' Comp Insurance?

Workers' comp insurance helps employers and employees.


As an employer, workers' comp insurance serves three purposes:

- It keeps you from having to pay for employee injuries out-of-pocket;

- It protects your business from being sued by employees who have suffered injuries on the job; and

- It lowers your risk of a huge financial loss in case your employees sustain injuries while working.

Moreover, since workers' comp insurance is legally required in most states, carrying adequate coverage helps you avoid fines or imprisonment.


Employees benefit from workers' comp insurance in the following ways:

- Workers' comp insurance covers medical costs related to work-related injuries;

- Workers' comp insurance covers the cost of ongoing care, such as physical therapy; and

- Workers' comp insurance provides wage loss benefits to replace employees' lost income;

6. How Much Does Workers' Comp Insurance Cost?

The cost of workers' comp insurance varies depending on your location, type of work, payroll size, and claims history. However, on average, employers pay between $0.57 and $2.32 for workers' comp insurance.

Protect Your Business with Workers' Comp Insurance

As you can see, workers' comp insurance for small businesses is essential. It ensures that your employees receive medical care after suffering work-related injuries and collect lost wages for days they could not report to work.

It also protects you from civil lawsuits, keeps you from paying for employees' medical expenses out-of-pocket, and helps you avoid fines and imprisonment associated with not carrying workers' compensation insurance.

If you have not yet invested in workers' comp insurance, do so today and protect your workforce and business. 

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