Workers’ compensation represents a compromise between employers and employees regarding the financial responsibility for employment-related injuries or illnesses. In short, employees relinquish their right to sue employers if they suffer some job-related injury or illness. In return, employers agree to provide state-mandated benefits if employees suffer some job-related injury or illness. To ensure employers have the money to pay these mandated benefits, most states require that employers demonstrate that they have the financial ability to pay any claims that may arise. Typically this financial ability is demonstrated through the purchase of workers’ compensation insurance. Laws regarding workers’ compensation insurance vary by state, so check with your independent insurance agent or broker to find out exactly what you need and how it’s purchased.
By law, you will be required to participate in workers’ compensation. There are exceptions, but the exceptions are few. The exceptions also differ by the state(s) in which you do business. As a general rule, if you are self-employed, you do not need to have workers’ compensation insurance. However, you can often “opt in” as a self-employed business person.
While your state's law might not require workers' compensation coverage, it can be a good idea to buy coverage. Just because the law doesn't force you to have workers' compensation coverage doesn't mean you won't be injured while working. If you're hurt, your workers' compensation insurance can really pay off, especially for a common accident such as a slip and fall.
Because workers’ compensation insurance is mandated by law, small-business owners often think that it is just one more overhead expense that provides little benefit. But good workers' compensation insurance is actually an affordable benefit that protects both you and your employees.
Your state insurance department or other appropriate agency is your best resource for insurance-related questions and concerns. Its website should give you up to date information on approved insurance companies and agents, insurance buying tips, claims filing information and much more; with the insurance companies and other sources giving assistance with things like rate quotes and comparisons.