What Is Workers' Compensation Insurance?
Workers' compensation insurance covers medical expenses, lost wages, and rehabilitation costs when an employee is injured or becomes ill due to their job. It also protects employers from lawsuits related to workplace injuries.
Is Workers' Comp Required?
Workers' compensation is legally required in almost every state once you have employees. Requirements vary by state — some require it with just one employee, others at three or five. Penalties for non-compliance include fines, criminal charges, and personal liability for injuries.
What Does Workers' Comp Cover?
- Medical expenses — doctor visits, surgery, prescriptions, physical therapy
- Lost wages — typically 60-70% of salary during recovery
- Disability benefits — temporary or permanent disability payments
- Rehabilitation — vocational retraining if needed
- Death benefits — funeral costs and survivor benefits
- Employer liability — legal defense if an employee sues
How Much Does Workers' Comp Cost?
Workers' comp premiums are based on:
- Classification codes — your industry and job types
- Payroll — total annual payroll by classification
- Experience modification rate (EMR) — your claims history vs. industry average
- State rates — each state has its own rating system
For low-risk office jobs, expect $0.20–$0.50 per $100 of payroll. High-risk trades like roofing or logging can be $5–$15+ per $100 of payroll.
Cheapest workers comp: Pie Insurance and biBERK start around $20/mo. Compare WC rates →