Workers' compensation is an insurance program that compensates employees for work-related injuries and illnesses. The plan covers medical and rehabilitation expenses, as well as part of the wages lost due to illness, injury, or permanent disability. The plan may also provide death benefits to family members.

Workers compensation insurance protects you because it keeps your employees from suing you and your business in the event of a workplace injury or work-related illness.

Is Workers' Compensation Insurance Required?

Yes. Workers compensation insurance is mandated by the state in which you operate your business. Regulations regarding workers compensation coverage vary slightly from state to state, so make sure you check with your state's Workers Compensation Office or Department of Insurance to find out what is mandated in your area.

Rules vary as to the minimum number of employees required to mandate workers' compensation coverage, safety standards that must be adhered to in order to get coverage, expenses, and how the plans are administered and organized. Businesses that do not carry adequate workers compensation insurance can be fined by state authorities.