Workers’ compensation is the only legally required commercial insurance policy. Employers may be held liable for workplace injuries and penalized for not carrying coverage.
Workers’ compensation laws are regulated at the state level, and requirements vary from state to state. Select your state below to learn more.
Workers’ compensation, which protects workers in the event of a job-related injury or fatality, covers nearly all employees in the United States. But every state has its own workers’ compensation laws on the books.
Each state's laws determine which businesses must carry workers’ compensation insurance, where it can be purchased, who needs to be covered by the policy, and the definition of an employee under the state workers' compensation system.
In most states, workers’ compensation is provided by insurance carriers or through an agency that has workers’ compensation insurance providers on its roster. Small business owners must purchase coverage from an insurer licensed to write in their state.
Some states, such as Arizona, also offer a state fund or a government-run insurance carrier that competes with the private market. Hard-to-insure businesses might need to turn to the state's assigned risk pool. Either state-run or managed by a third party, the assigned risk pool places these businesses with an insurer to secure coverage.
State law dictates who must be covered under the workers' compensation policy. In general, businesses with employees are required to carry workers’ compensation insurance, but this can vary from state to state and even industry to industry.
If the employer is required to carry coverage, all employees must be included on the policy; this includes full-time, part-time, seasonal and temporary workers.
All branches of the state government play a role in writing or interpreting the laws that govern the workers’ compensation system. They may also take measures to control costs, resolve disputes and determine how medical care is administered.
Workers' compensation rates — which are used to calculate the insurance premiums — also differ by state, which is why insurance costs can vary widely from one state to another.
Workers' compensation rates are influenced by the cost of wages and medical care, the economic makeup of the state, and its recent history of workers’ compensation claims. National trends may affect particular work comp markets, such as the emergence of gig economy workers like Uber and TaskRabbit. But legal standards, rates and enforcement are handled on a state-by-state basis.
For more information on buying workers' compensation insurance in your state, see these resources: