Business Insurance
Workers Compensation Insurance
Workers comp provides no-fault benefits to injured workers while shielding employers from most personal injury lawsuits arising from workplace accidents.
Last reviewed: May 2026 · Editorial methodology
Definition
Workers compensation insurance is required in virtually every state for businesses with employees (Texas being the notable exception where it is elective) and pays for medical treatment, rehabilitation, and a portion of lost wages for employees who are injured or become ill due to work. In exchange, the exclusive remedy doctrine bars employees from suing their employer in civil court for workplace injuries in most circumstances. Premium is calculated as a rate per $100 of payroll multiplied by the workers comp class code for each job type — a clerical worker may carry a rate of $0.15/$100 while an ironworker's rate could be $15–$30/$100. Small businesses in low-risk industries might pay $2,000–$8,000/year, while construction companies with large payrolls commonly pay $50,000–$500,000/year or more. State-run programs set benefit levels, waiting periods, and dispute resolution rules, creating significant variation in cost and procedure across the 50 states. Misclassifying employees as independent contractors to avoid workers comp premiums is a serious legal risk, as audits can result in retroactive premiums, penalties, and personal liability for owners.
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Cover Forge USA Editorial Team
Editorial Lead
This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.
Reviewed 2026-06-14
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