Workers' Compensation Insurance can pay for three things when an employee is injured at work: medical bills, recovery costs, and partial missed wages. If an employee dies, Workers' Comp can cover funeral costs and benefits to the worker's family. Depending on state laws and contract requirements, you may need this policy to cover employees, contractors, freelancers, or even yourself. Workers' Comp (formerly "workman's comp") emerged from a "grand bargain" between business owners and workers. Business owners were tired of being sued by injured workers. Workers were tired of being injured.
So Workers' Comp Insurance was designed to help pay for work injuries and illnesses without the rigmarole of a lawsuit. This liability insurance policy can help your business do three things:
- Pay for medical expenses and replacement wages when employees are injured at work.
- Comply with state Workers' Comp laws.
- Pay for legal expenses if an employee sues over a work injury the policy doesn't cover.
California requires employers to buy Workers' Compensation Insurance as soon as they hire their first employee. Even when that's not the case, it's smart to have this policy, because the cost of workplace injuries is substantial.