Workers compensation insurance pays medical expenses, rehabilitation costs, and a portion of lost wages for employees who are injured or become ill because of their job. It also protects your business from lawsuits by injured employees - in exchange for guaranteed benefits, employees give up the right to sue. Most states require workers compensation insurance - requirements vary by state, but nearly every employer with one or more employees needs coverage.
We're not just selling insurance. We're here to make sure you understand your options, feel confident in your coverage, and have someone in your corner when it matters most.
Who needs workers compensation?
Most states require workers compensation for businesses with one or more employees, with only narrow exceptions for certain agricultural and domestic workers. This applies to every industry - contractors, restaurants, manufacturers, offices, retail stores, and professional services firms. States take enforcement seriously, and operating without required workers comp can result in significant fines and legal penalties. Beyond legal compliance, the practical reality is that a single serious workplace injury - a roofer's fall, a kitchen burn, a repetitive-stress injury at a manufacturing plant - can generate $50,000 to $500,000+ in medical and wage-replacement costs. General contractors verify subcontractor workers comp certificates before allowing anyone on site; without coverage, you'll be locked out of jobs. We shop top-rated commercial carriers and work with assigned risk pools when needed.
What does workers compensation cover?
- Medical expenses for work-related injuries and illnesses - doctor visits, surgery, medication, physical therapy
- Lost wages (typically a percentage of the employee's average weekly wage, as determined by state law)
- Vocational rehabilitation if an employee cannot return to their previous job
- Death benefits and funeral expenses for fatal workplace injuries
- Employer's liability coverage - legal defense if an employee sues beyond the comp claim
- Coverage applies regardless of fault - no need to prove the employer was negligent
What workers compensation does NOT cover
- Independent contractors (but misclassification can result in audits and penalties)
- Sole proprietors and partners - they can elect to include themselves but are not required to
- Intentional self-inflicted injuries
- Injuries sustained while under the influence of drugs or alcohol
- Injuries from a fight the employee started
- Non-work-related injuries or illnesses that happen to occur at the workplace
- 1099 workers (unless they're determined to be misclassified employees)
What does workers compensation cost?
Workers comp premiums are calculated as a rate per $100 of payroll, and the rate varies dramatically by job classification. An office worker (clerical class code) might cost $0.30–$0.50 per $100 of payroll, while a roofer can cost $12–$18 per $100 of payroll. For a roofing company running $500,000 in annual payroll, that translates to $60,000–$90,000 per year in workers comp premium alone. Your experience modification rate (mod) is the single biggest controllable cost factor - a clean safety record can earn you a mod below 1.0 and cut your premium by 10–25%. Conversely, frequent claims push your mod up and increase costs for three years. We shop top-rated carriers and advise on safety programs and return-to-work strategies to keep your mod low.
Frequently asked questions
Subcontractors with employees must carry their own workers comp. If a subcontractor without workers comp has an employee get injured on your job site, their claim can roll up to the general contractor's policy - increasing the GC's costs and experience mod. That's why most GCs require certificates of insurance from every sub before they set foot on the job.
In many states, sole proprietors and partners may elect to exclude themselves from workers comp coverage. LLC members and corporate officers may also have exclusion options depending on their role. However, excluding yourself means you have no coverage for your own work injuries - and some contracts and clients require owners to be included. We walk through the pros and cons for your specific situation.
Your experience mod compares your business's claims history to the average for your industry. A mod of 1.0 is average. Below 1.0 means fewer claims than average - you get a discount. Above 1.0 means more claims - you pay a surcharge. A mod of 1.3 means you're paying 30% more than average. Claims stay on your mod for three years, so one bad year has a long tail. Investing in safety programs and return-to-work policies is the most effective way to control your workers comp costs.
Operating without required workers compensation can result in severe penalties, including substantial fines per day of non-compliance, and you become personally liable for all employee injury costs with no insurance to backstop you. Most states actively audit and enforce compliance. It's not worth the risk.
Workers comp policies are audited annually. You provide actual payroll records, and the carrier adjusts your premium based on real payroll versus the estimate used at policy inception. If your payroll grew, you'll owe additional premium. If it shrank, you'll get a refund. Misclassifying employees - putting a roofer in a clerical class code, for example - can trigger audit penalties. We help clients prepare for audits and ensure classifications are accurate from day one.
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Related coverage to consider
- General Liability - Covers your business if a customer, vendor, or visitor is injured at your location, or if your work damages someone else's property.
- Commercial Auto - Covers vehicles owned or used by your business, including company cars, trucks, vans, and fleets.
- Disability Insurance - Replaces a portion of your income (typically 50–70%) if you're unable to work due to illness or injury.
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Reviewed by
Sheilia Royal, Agency Principal / Licensed Agent
Licensed in KY, IN & TN | 20 years experience | Last reviewed: March 2026