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Nearly every state requires employers to carry worker’s compensation insurance.  Failure to carry the appropriate insurance can result in fines and expose the business to claims from an injured employee.

Why Does Worker’s Comp Insurance Exist?

Worker’s comp insurance exists because workplace injuries happen. In most cases, workers’ compensation is the “exclusive remedy” available to an injured worker.  If an employee is injured, payment for their care, treatment a percentage of lost wages is guaranteed.  In exchange, the employee gives up the right to sue their employer for negligence.  This system ensures prompt payment of medical bills and lost salary without delays or legal proceedings.  Employees can return to work more quickly and employers can operate without the threat of lawsuits.

The History of Worker’s Comp: An American Coverage with German Roots

Worker’s compensation laws have been in place in various US states since the late 1800s. But the original idea seems to have come from German Chancellor Otto von Bismarck. According to the US Social Security office, von Bismarck is also responsible for the building blocks of social care for the elderly, which we now recognize as Medicare and Social Security income.

  • The German system provided long-term disability benefits as well.
  • Participation was mandatory among all individuals and organizations.
  • Contributions to the program came from the employee, the employer, and the German government.

In the US, no federal law requires that employers maintain worker’s comp insurance, but most states require it.  Pricing is usually based on the location of the employee, their occupation, and the company’s claim history.  As you might expect, rates for office workers is lower than for roofers.

Traditionally, our nation’s most dangerous jobs include:

  • Mining
  • Construction
  • Roofing
  • Logging
  • And aircraft piloting and maintenance

Generally, worker’s comp is more expensive for businesses in these sectors. Still, a workplace injury can occur at any job! Hospital staff can slip and fall over extension cords, biology teachers can accidentally slice open their hands, even a banker could step on a freshly waxed floor and find themselves calling in a worker’s compensation claim. Accidents do happen!

Modern Worker’s Comp Insurance in the US

If you have employees, you are usually required to carry workers’ compensation insurance.  There are a few exceptions, such as for single-member LLCs or in the few locations where it is not mandatory.  However, even if not required by law, workers’ compensation insurance might be required by a contract you have with a client.

Most employees who experience a workplace injury will receive medical care and, in some cases, ongoing payments to compensate for long-term disabilities. Injuries can be acute, like a slip and fall injury, or can occur over time, as is the case with a repetitive stress injury like carpal tunnel syndrome.

“Are auto accidents covered by worker’s comp?”

Generally, injuries that happen on the commute to or from work are not covered. But if an employee is on company time when the accident occurs the injury is typically covered.

There are a few gray areas, such as when an employee is on a break or running a personal errand in connection with their work duties.  You’ll want to speak with an experienced insurance agent for more information on when coverage applies.

Compliance for Employers

An employer can comply with state regulations to provide workers’ comp coverage in two ways. Most organizations choose to purchase WCI through a private insurance company. Large organizations and government employers sometimes prefer to self-insure. In that case, they would keep significant funds on hand to pay for employee medical care and wages after a workplace injury.

It is important to understand who is and is not covered by your worker’s compensation insurance.  Often, certain members of a company, such as an owner, are excluded.  Contact your broker for an overview of how workers’ compensation insurance works and how you can protect yourself, your employees, and your business.

Here at, we’re proud to offer WCI for New Jersey businesses of many types and sizes. We work with various carriers and can help you with all your business insurance needs like group health insurancegeneral liabilityprofessional liability insuranceemployee benefitsumbrella insurance, and more. Contact us to learn more about worker’s compensation insurance today.