Fine Print Guide

Employees and management · WC / EL

Workers' compensation

Pays medical bills and part of lost wages for employees hurt or made ill by their job, whoever was at fault. In return, employees generally can't sue you over it.

Who it's for
Any business with employees. In some states even one part-time employee counts.
Is it required?
Yes, in nearly every state once you have employees. Thresholds vary; Texas is the main state where it's optional for private employers. In Ohio, North Dakota, Washington and Wyoming you must buy it from the state fund.

Usually covered

  • Medical care for work-related injuries and illnesses
  • Part of lost wages, often about two thirds
  • Rehabilitation and retraining
  • Death benefits for the family
  • Lawsuits connected to work injuries, through employer's liability

Usually not covered

  • Independent contractors, but misclassifying an employee as a contractor can leave you liable
  • Injuries while commuting to and from work
  • Injuries from intoxication or horseplay, in many states
  • Injuries outside work, which may fall under disability or health insurance

Real-life examples

A warehouse worker hurts their back lifting boxes.

Usually covered

Medical bills and part of their wages while they recover are paid, regardless of fault.

An employee is injured in a car crash on the way to the office.

Usually not covered

Ordinary commuting usually isn't covered. Driving between client sites during the workday usually is.

The two parts

1Workers' compensationBenefits set by state law

Pays what your state's law requires: medical care and wage benefits. There's no dollar limit; the law sets the benefits.

2Employer's liabilityLawsuits connected to work injuries

Covers the lawsuits workers' comp doesn't block, like a family member suing, up to a limit such as $100,000 or $1 million.

Good to know

How the price is worked out

Premium is based on payroll, per $100, and a rate for each type of job (class code). At the end of the year the insurer audits your real payroll and adjusts the bill.

Check your own policy

Find these on your policy or declarations page, or ask your agent:

  • Every state where you have employees is listed
  • Correct job class codes
  • Whether owners are included or excluded
  • Employer's liability limits

Not sure where to look? See how to read your policy.

Related