The latest statistics about workers’ compensation insurance payouts in the US are from 2023, and they show $47,975,234 was dished out to employees who had been injured at work. That’s according to the Insurance Information Institute. In the same year, 2023, there were 4.07 million medically consulted work injuries, according to the National Safety Council.
Injuries are not exactly uncommon, and some industries are more prone to reporting injuries and illnesses (workers’ compensation insurance covers injuries) than others. The healthcare and social assistance, transportation and warehousing, manufacturing, and retail trade sectors report the most injuries and illnesses.
And even if your business falls outside those industries but you have employees, you should know about workers’ compensation insurance and what it covers. Read on to find out.
What’s Workers’ Compensation Insurance?
Workers compensation insurance is a policy that any business with employees should have. It’s insurance that gives financial benefits to employees who were either injured at work or fell ill because of their work.
Illness isn’t as common as injury, and it doesn’t apply to all industries. For example, healthcare workers are susceptible to contracting serious hospital-acquired illnesses and should have insurance coverage against that.
It should be mandatory for all businesses, and most states enforce that any company with employees needs workers’ insurance.
What Exactly Does Workers’ Compensation Insurance Cover?
Not all workplace illnesses and injuries are covered in a workers’ insurance policy. For those businesses that have a workers’ insurance policy, employees will often receive:
- Medical care
- Cover for lost wages
- Rehabilitation support
The level of compensation depends on the policy. Sometimes, but not always, the compensation insurance covers death benefits for the families of employees who lose their lives at work. In the US, the US Department of Labor reported 826 work-related deaths in 2024, a decrease of 3.7% from 2022.
Does Your Company Need It?
Yes, if you have employees, your business should have workers’ insurance. It’s the law in most states, as we mentioned previously. The exact law enforced varies depending on the state, but it’s typically through state-level workers’ compensation laws. They will mandate coverage for employees when a business has one or more workers. It isn’t only the law for big companies; it’s the law for even the smallest of startups with only one employee.
Within the laws will be a specific outline of the level of cover required. Depending on the state and their policies, the law mandates different levels of cover for different industries. It’s essential to know the specifics for the state your business operates in.
The Issues Businesses Have Without Workers’ Insurance
Well, one issue can be the law. If you’re a business with one or more employees and you don’t have cover, you’re breaking the law.
The other issue is not having the correct level of cover for your industry and company operations. You might have coverage, but if your employees are working outside of the range of your level of coverage and you haven’t stated that when starting the policy, and then they become injured or contract an illness, your business can face massive lawsuits, or you’ll need to cover all of the costs out of pocket.
Reputation matters too. Word spreads fast—if you’re not protecting your team, people notice. Talented employees might avoid working with you. Clients might think twice. Trust is fragile, and not having the right coverage can break it instantly.
How to Get Workers’ Insurance
Securing workers’ insurance isn’t complicated, but it’s not one-size-fits-all either. First, you need to know your state’s laws. Some states run their own workers’ compensation funds, meaning businesses must buy insurance through a state program. Others give you the freedom to choose from private insurance carriers.
If you’re going through a private insurer, shop around. Compare quotes. Look at coverage limits, premiums, and reputation. A good policy balances cost with coverage—you want protection without overpaying, but the cheapest plan might not include the support your employees need if something goes wrong.
Workers’ compensation insurance isn’t just about ticking a legal box. It’s about doing right by your employees and safeguarding your business. Accidents happen—even in the safest environments—and when they do, the fallout can be financially devastating without the right cover in place.
