Workers’ Comp Insurance

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

In the realm of business, ensuring the safety and well-being of employees is paramount. Workers’ comp insurance, often referred to as “workman’s compensation,” plays a pivotal role in this. But what is it, and why is it so crucial for small businesses? Let’s delve deep into the world of workers’ comp insurance, shedding light on its importance, costs, and how to secure the best policy for your business.

What is Workers’ Comp Insurance?

Workers’ comp insurance is a type of insurance that provides wage replacement and medical benefits to employees injured in the course of employment. In essence, it’s a safety net, ensuring that if an unfortunate incident occurs at work, the affected employee is taken care of financially and medically.

Example: Imagine an employee at a construction site accidentally drops a heavy tool on their foot. The medical expenses and potential lost wages from time off work can be covered by workers’ comp insurance.

Workers Comp Insurance

What Does Workers Compensation Insurance Cover?

Workers’ compensation insurance typically covers a range of expenses related to workplace injuries and illnesses, including:

  • Medical expenses: This includes expenses related to medical treatment, such as hospitalization, surgery, and medication.
  • Lost wages: Workers’ compensation insurance provides a portion of an employee’s lost wages if they cannot work due to injury or illness.
  • Disability benefits: If an employee is permanently disabled due to their workplace injury or illness, workers’ compensation insurance may provide long-term disability benefits.
  • Rehabilitation expenses: Workers’ compensation insurance may cover the cost of rehabilitation services, such as physical therapy, to help employees recover from their injuries.
  • Death benefits: If an employee dies due to workplace injury or illness, workers’ compensation insurance may provide death benefits to their family members.
How Much Does Workman Compensation Cost

Why is Workman’s Compensation Insurance essential?

  • Protection for Employees: At its core, this insurance ensures that workers are protected financially if they suffer from work-related injuries or illnesses.
  • Legal Compliance: In many jurisdictions, it’s mandatory for businesses to have workers’ comp insurance. Not having it can result in hefty fines or legal complications.
  • Financial Security for Businesses: Without insurance, a company might have to pay out-of-pocket for medical expenses and lawsuits, which can be financially crippling.

How Much Does Workers’ Comp Insurance Cost?

The cost of workers’ comp insurance varies based on several factors:

  • Location: The state in which your employees operate can greatly influence the cost of your workers’ compensation premium. Every state has distinct workers’ compensation regulations and rating agencies that determine the foundational rate.
  • Number of Employees: Businesses with more employees generally pay more for workers’ comp. As your business grows, the odds of an employee getting injured at work increase, leading to higher workers’ compensation rates.workers’
  • Type of Work: Physically demanding work usually results in higher premium rates. Here is a look at one high-risk job and a low-risk job.
    • Construction: The construction industry is considered high-risk due to the nature of the work. About 20% of worker fatalities in private industry occur in construction. This higher chance of on-the-job accidents means construction companies will pay higher premiums.
    • Finance and Accounting: Businesses in industries like finance and accounting will have lower premiums. This is because there’s minimal risk of a work-related injury in such settings.
  • Payroll: The amount you pay for workers’ compensation is calculated based on your company’s total payroll. For instance, employer costs for workers’ compensation per $100 of covered payroll range from $0.46 in Texas to $1.78 in Wyoming.
  • Claims History: Companies with a history of many claims might face higher premiums.

Small businesses typically spend around $45 monthly or $542 yearly on workers’ compensation insurance. This average is based on the median price of policies acquired by Insureon’s clients from top insurance providers. Keep in mind the actual cost for your business may vary based on the mentioned factors above.

Cost Of Workers Insurance

How to Get Workers’ Comp Insurance?

Securing workers’ comp insurance involves a few straightforward steps:

  1. Assess Your Needs: Understand the specific risks associated with your industry and business size.
  2. Research Providers: Look for insurance companies that specialize in workers’ comp and have a good reputation.
  3. Get Quotes: Approach multiple providers to get a sense of the market rate.
  4. Review Policies: Ensure the policy covers all potential risks and has no hidden clauses.
  5. Purchase and Regularly Review: Once you’ve selected a policy, purchase it and review it annually to ensure it remains relevant.

Insights Beyond the Obvious: The Human Element

While we’ve discussed the financial and legal aspects of workers’ comp insurance, it’s essential to remember the human element. This insurance isn’t just about compliance or protecting the bottom line; it’s about ensuring that every individual in a company’s ecosystem is cared for and protected. It’s a testament to a business’s values and its commitment to its people.


Workers’ comp insurance is more than just a legal requirement or financial safeguard; it’s a reflection of a business’s ethos and its dedication to its employees. Whether you’re a small business owner or a decision-maker in a larger organization, understanding the intricacies of workers’ comp insurance is crucial. By ensuring that you have the best policy in place, you’re not only protecting your business but also showing your employees that their well-being is a top priority. Remember, a business thrives when its people thrive. Invest in workers’ comp insurance, and you’re investing in a brighter, more secure future for everyone involved.

Request A Quote

Get help or a quote from a licensed financial professional. This service is free of charge.

Contact Us

Frequently Asked Questions

What is the longest you can be on workers comp?

The range for disability benefits can span from three to seven years. Usually, there is no limit on permanent disability benefits, but in some states, weekly benefits are stopped when employees reach 65 years of age. It is important to note that not all states offer permanent partial disability benefits.

What would be an example of an employee’s compensation and benefits?

Employee benefits are additional compensation besides their regular salaries or wages, including health insurance, retirement benefits, and paid time off.

When is worker’s compensation awarded?

Workers can only receive compensation for injuries that occur while on the job.

Which of the following are expected employee benefits?

Employers often provide benefits such as medical insurance, dental and vision coverage, life insurance, and retirement planning. However, there may be additional types of benefits and perks that employers offer to their employees.

Which part of a company handles employee compensation and benefits?

Human resources managers oversee administrative functions in an organization, while human resources specialists handle recruitment, screening, interviewing, and placement of new employees. They may also be responsible for compensation, benefits, training, and employee relations.

Can an employee receive both workers’ compensation benefits and Social Security Disability Insurance (SSDI) benefits at the same time?

Yes, an employee may be eligible to receive both workers’ compensation benefits and Social Security Disability Insurance (SSDI) benefits at the same time. Still, the total amount of benefits cannot exceed a certain threshold.

What is the difference between Employers Liability Insurance vs. Workers’ Compensation?

Workers’ Compensation covers employees’ medical expenses and lost wages due to work-related injuries or illnesses, irrespective of fault. Employer’s Liability Insurance protects employers from financial loss if a worker alleges that the employer’s negligence caused their injury or illness, offering a safeguard in lawsuits over and above the Workers’ Compensation benefits. Both are typically bundled in a Workers’ Compensation policy.

What is the difference between workers’ compensation and general liability insurance?

Workers’ compensation covers employee injuries or illnesses related to work, providing medical and wage benefits. General liability insurance protects businesses against third-party claims for bodily injury, property damage, and advertising injuries, but doesn’t cover employee injuries. Each addresses different risks and liabilities within a business setting.

What is the difference between workers comp and disability insurance?

Workers’ comp provides benefits for work-related injuries or illnesses, covering medical expenses and a portion of lost wages. Disability insurance offers income replacement for individuals unable to work due to disability, regardless of whether the disability is work-related. Each serves a distinct purpose in supporting individuals facing health-related work interruptions.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

Scroll to Top