New Business Owners: Here’s What You Need To Know About Workers’ Comp Insurance


If you’re a new business owner, particularly a small business like a startup, you might be facing the common struggle of keeping costs low and trying to decide what’s a necessity (and what can wait until your busy grows more).

One thing that many new business owners overlook is carrying workers’ compensation insurance. Find out what workers’ comp insurance is and how important it is to offer to your employees.

A Quick Look at Workers’ Compensation Insurance

Workers’ compensation insurance is a requirement in most states and is designed to cover work-related injuries or illnesses and even injuries sustained in a car accident while on the job. Workers’ comp insurance provides compensation to injured employees and covers many expenses related to an injury or accident such as missed work or medical bills.

Some business owners are unaware that they need to carry workers’ compensation insurance or assume that it’s already a part of their coverage plan. According to the Insurance Information Institute (III), workers’ compensation is typically a separate policy and not included in other coverage plans.

Protecting Your Employees

There are plenty of business owner insurance policies that protect your business, loss of income, and other important assets in the event of an emergency but workers’ compensation insurance is the best way to protect your employees while they are on the job.

Even if you have workplace safety plans and procedures in place, and provide adequate training, work-related injuries and illnesses are often inevitable. Whether an employee became injured after a careless mistake or a “freak” accident, workers’ compensation insurance is designed to provide financial support to the injured employee.

How Workers’ Comp Insurance Benefits Business Owners

Some business owners are hesitant to get workers’ compensation insurance because they are worried that it’s an unnecessary expense that only benefits employers. Providing workers’ comp insurance to your employees is not only beneficial to them, but it can protect you in the event of an accident.

If an employee is injured on the job, workers’ comp prevents your employee from taking further legal action against you (in most cases). By being covered by workers’ comp, your employees are relinquishing their right to sue you for negligence. Adequate coverage can also help cover the cost of any damages made by employees due to their negligence. It is better to acquire as much knowledge as possible about workers’ compensation claims and subrogation in workers compensation.

While workers’ compensation insurance is an extra expense, it can ultimately save you thousands of dollars in the long run.

What Happens if You Don’t Carry Workers’ Compensation Insurance?

Even if you are not legally obligated to carry workers’ comp insurance for your employees, it’s strongly recommended. As we already noted, it benefits both you and your employees in the event of a work-related injury (whether or not it was someone’s fault or an accident).

Choosing not to carry workers’ comp insurance can lead to financial and legal issues that can put you in debt and even tarnish your reputation as a business owner. Even if you only have one employee, providing proper coverage is essential.


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