What is workers’ comp insurance?

In the simplest terms, workers’ compensation is a form of risk-pooling. Businesses pay into a collective compensation fund run by their state or private insurance company, and then report a claim during a policy term if an employee gets injured or contracts a job-specific disease on the job. 

A workers' comp policy is divided into three parts:

• Part A. Workers’ compensation insurance

This is the part of your policy that actually covers your employees if they get injured on the job. There’s no deductible, and no upper limit for this coverage. 

Workers’ comp is designed to provide protection for workers. It will cover medical expenses, lost wages, and rehabilitation costs. It also covers death benefits and funeral expenses if the worker dies.

• Part B. Employers’ liability coverage
  

This is a lesser-known part of a workers’ comp policy, but it’s important because it protects your business from employee lawsuits. It covers the legal costs if an employee sues their employer for negligence. 

• Part C. Other states insurance    

This is the part of the policy that extends your coverage to states not listed on your policy. This is intended for temporary work only and states should be added to your policy if work will be done there on a permanent basis.