Required by the State, Workers' Compensation is a "no-fault" insurance system that pays monetary benefits to workers who are injured on the job to cover medical care, a portion of lost wages and permanent disability. In return, employers receive immunity from civil lawsuits by employees over such workplace injuries.

Each State has its own set of laws and regulations regarding Worker’s Compensation Insurance coverage, ranging from the percentages an insurer must pay, drug testing, safety standards, and the minimum amount of employees needed for coverage. While Missouri may not require a business with less than five employees to carry Worker’s Compensation Insurance, the State of California mandates that an employer must have coverage even for just one employee.

It is an employer’s responsibility and obligation to know their state’s minimum employee requirement for Worker’s Compensation Insurance coverage before hiring employees to not only comply with state regulations, but also know the total cost of an employee.

Workers’ Compensation Insurance protects the employer from complete financial liability as well as possible legal action. Instead of a huge liability cost that may occur in the future, the employer pays a premium based on the size of the business, number of employees, and the loss or claims history (in this case, the amount of injuries) the business has experienced in the past as compared to other businesses in the same industry.  Every year, a business’s insurance premium is recalculated, and can raise, lower, or stay the same depending on these factors.

In case of death, coverage also spans to compensate a percentage of the deceased employee’s wages to the family in order to keep them on their feet. If an employee is no longer able to perform the duties of their previous position, Workers Compensation Insurance coverage will also cover the cost of training for a different but substantially equal position within the company, if available. Workers’ Compensation Insurance is essential to ensuring the safety and peace of mind of both the employees and the employer in almost any incident-related situation.