Workers Compensation Insurance – How does it work?

As a result of activism on the part of labor unions back in the 1900’s we have what we today call Workers Compensation Insurance. What this basically means is that employers compensate for whatever accident happens to their workers during work.

The specific details of how the compensation actually works can be confusing, so we are going to try to explain what it is, what it means and why it is something you need.

According to, workers compensation insurance is important for any employee working any job, but it is of the highest importance for people who work high-risk jobs that can make it more likely for workers to get sick, or worse if they were sick to begin with, like electricians, excavators, contracting and construction jobs.


Workers compensation covers 6 things:

1. Compensation for lost wages. What this is means is that if you get injured at work and are not able to work, you will get covered for the wages that you missed out on.

2. Disability Benefits. This means if you are not able to physically do your job for a long period of time, and this was caused by your workplace, you are coverd for that.

3. Liablity insurance for legal defence. Let’s say you are suing your company, your Worker’s compensation Insurance will cover the cost of the defense.

4. Medical Benefits. Medical expenses are covered for injuries that happened at the workplace.

5. Rehabilitation Benefits. In case of a crippling injury at the workplace, rehabilitation to recovery is covered.

6. Death. If a death while at work happens, Worker’s compensation will cover the funeral expenses.

All 50 states have worker’s compensation but not all of them require that your employer provide it. You should contact your insurance agent in order to find about your specific situation.

While this is a complicated concept, there are general exclusions that will make it a bit easier for workers to understand it.

1. If a company has less than 3 workers, compensation usually won’t be required.

2. Particular states will let you to insure your self without dealing with a insurance agency.

3. Particular states won’t include subcontractors on their list.

The cost of Worker’s compensation insurance will depend onmany different things. Your company’s age, reputation, track record and location.


When employees are loking for jobs, many of them will look for worker’s compensation. This is especially the case with jobs that include risk, like construction and contracting. So having worker’s compensation insurance can spare you from losing a lot of money on lawsuits and medical bills even if your state doesn’t require it.

Considering everything said, it is not always easy to understand how it works. Policies differ from state to state, depending on the type of business that your company deals with. Therefore that can make getting the right worker’s compensation harder than it might seem. So a good choice for anyone who need worker’s compensation is to contact professionals that can help them get what they need.