Why Your Small Business Needs Workers Compensation Insurance

Why Your Small Business Needs Workers Compensation Insurance

Whether you have only one or 50 employees, your business can benefit from workers’ compensation insurance. It can cover medical expenses and lost wages for work-related illnesses, injuries, and lawsuits. Most US states require workers’ compensation insurance though details may vary from one state to another. Unfortunately, many small business owners overlook the need and importance of this type of business insurance. Still, the moment they hire an employee, they are legally required to carry this coverage.

Find out more reasons why you need workers’ compensation insurance.

  • Importance

Workers comp is essential because most states require it. It covers lost wages and medical expenses caused by work-related injuries, and most policies cover employee lawsuits. If you do not have it, an injury or illness can significantly affect your business, for you have to shoulder the expenses out of your pocket. It also protects your workforce, which is your business’s most valuable asset. If they get the support they need, they can return to work with full strength. This will also make them feel that you value them and, in turn, help your business continue operating and succeeding.

  • Protection against lawsuits

Some injured workers choose to file lawsuits against employers because of negligence or not preventing a work-related accident. Most workers comp insurance online will cover lawsuits as employer’s liability insurance. If an employee files a case, your insurance will pay for attorney’s fees, court expenses, judgments, and settlements.

  • Coverage of fatal accidents

Most workers’ compensation insurance cover death benefits. The surviving family can use these to pay for burial or funeral costs. The policy can also provide financial assistance to the deceased worker’s family.

  • Exclusions

Some scenarios would result in disapproval of workers’ compensation claims. These include commuting, substance abuse, and workplace fight. For example, a worker can only be covered if using a company car and does not have a physical office, but if he commutes to and from work, it is excluded. In addition, most states exclude intoxication and substance abuse as contributory to the injury. The same applies if an injury is due to a personal fight with a fellow worker, except if the fight was about work.


Workers’ compensation insurance pays employees significant benefits for sickness or injury caused by their job, regardless of who is at fault. It includes ongoing care such as physical therapy and the cost of lost wages due to the inability to work. It is important for your business to comply, for most states require it. More importantly, it helps protect against sudden medical expenses or lost wages. Even if it does not guarantee that a worker will not sue you for the injuries sustained from performing their duty, workers’ compensation laws mainly prevent workers from suing their employers.

It’s also important to note that your general liability insurance or health insurance does not cover workers’ compensation claims. On the other hand, private health insurance covers illness or injury due to non-work-related reasons. Thus, it does not offer payment for missed wages.

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