It’s true that money can’t buy you happiness. But insurance can buy you peace of mind. According to statistics, worker’s compensation carries 6.2% of total net premiums, making it the second largest commercial line. Most states require businesses to have workman’s comp, and they may face penalties if they don’t comply. But what is a workman’s comp?

What is Workman’s Comp?

Worker’s compensation is an insurance cover that protects employers from liability if an employee is injured in the workplace. This cover allows financial risk transfer from the business to the insurance company to help your employees focus on healing. The coverage you get for your business depends on the number of employees, the history of workplace accidents, and your employees’ risk of exposure.

Every business requires staff, and hiring them is a huge insurance risk that you must prepare for. Employees are exposed to injury even from mundane tasks like hurting their back when bending to pick up a package. Given how unpredictable these workplace injuries are, having a workmans comp cover is crucial.

In addition, this insurance covers an employee’s medical expenses, lost wages, death benefits if the accident is fatal, disability benefits, workplace-related injury lawsuits, and other expenses as long as the employee is injured in the workplace.

Why Small Businesses Need Workman’s Comp

1. Transfer of financial risk

The most important reason your business needs a workman’s comp cover is to transfer financial risk to the insurer. Workplace injuries range from mild to severe, and depending on their severity, paying from your accounts can harm the business economically. That is why every small business should respect the importance of a workman’s comp cover.

When the financial risk is transferred to the insurance company, you can focus on your business operations. At the same time, the affected employee receives the care they need and can focus on healing. Workman’s comp is a win-win for both the business and the employees. In addition, it protects your business from lawsuits for workplace-related injuries.

2. Compliance with State laws

In most states, businesses must carry workman’s comp insurance regardless of the number of employees they have or their industry. This means that even sole proprietorships may be required to have this cover. However, most small businesses and those with mainly desk jobs skip getting the cover, assuming that accidents are unlikely.

However, skipping the cover may be illegal in your state and lead to legal penalties and fines. In addition, it could strain your company resources in the event of a workplace-related injury and involve you in lawsuits that further strain your budget.


Workman’s comp laws differ from state to state, but every small business needs this policy as soon as they hire the first employee. Even if the state laws don’t require it, it is advisable to get this cover for protection against employee lawsuits and medical expenses from workplace-related injuries like falls, slips, or injury from machinery. Without the cover, your business will be held liable for legal fees and medical bills and incur hefty penalties for noncompliance.


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