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How to Choose a Workers’ Comp Insurance Policy

How to Choose a Workers’ Comp Insurance Policy

Nearly every state requires business owners to purchase a workers’ compensation policy for their employees—and some states even impose severe penalties if you fail to comply.

In this guide, we’ll cover the following topics regarding workers’ comp insurance policies:

  1. Why Employers Need Workers’ Comp Insurance

  2. How Workers’ Comp Works

  3. The Difference Between Liability and Workers’ Compensation Insurance

  4. Workers’ Comp Insurance Costs

  5. How to Choose a Workers’ Comp Insurance Policy

  6. How to Purchase Workers’ Comp Insurance for Your Business

Why Do You Need Workers’ Comp Insurance?

While your employees should always follow safety guidelines and look out for their coworkers, the Occupational Safety and Health Administration (OSHA) puts the onus on businesses. According to OSHA law, employers are required to examine workplace conditions, remove serious hazards, provide health and safety training, uphold safety procedures, and report workplace injuries and illnesses.

In addition to federal regulations, your state puts its own health and safety responsibilities on your business. These include offering insurance and assisting employees with filing claims if they get injured on the job. However, every state is different; some allow sole proprietors and certain small business owners to forgo workers’ compensation insurance.

You can check your state laws to see if workers’ compensation insurance is mandatory. Even if it’s not, you’re still required to follow OSHA regulations and maintain a safe workplace. Plus, workers’ compensation insurance is beneficial for any business, regardless of the law.

How Does Workers’ Comp Work for Employers?

Every workplace poses risks to employees. If you work in an industry like construction or transportation, they are obvious—vehicle accidents, falling ladders, and faulty machinery, to name a few. However, even employees in the most low-exposure fields can have accidents. Your office worker could slip on the steps, throw out their back, and rack up thousands of dollars in medical bills.

Workers’ compensation insurance protects both you and your employees from the financial repercussions of a workplace accident. When someone sustains an injury or falls sick while on the job, their health insurance won’t handle the medical bills. Instead, your policy kicks in to pay for their surgeries, doctor visits, rehabilitation costs, and a portion of lost wages until they return to work.

Workers’ compensation insurance doesn’t just keep your employees from draining their bank accounts due to a work-related injury. It also protects your business from legal repercussions. If you don’t have a workers’ compensation policy, your employees could sue you for payment. A policy generally prevents employees from pursuing legal action. However, in the off chance that you do get hit with a lawsuit, your employer’s liability coverage provides financial assistance for your business.

The Difference Between Liability and Workers’ Compensation Insurance

Liability insurance protects your business from legal claims arising from injuries or damages caused by your operations. On the other hand, workers’ compensation insurance is all about taking care of your employees. If they get injured or fall ill on the job, workers’ comp pays for their medical expenses, rehabilitation costs, and even lost wages. Liability insurance is often a legal requirement, while workers’ compensation insurance is mandatory in most states.

How Much Does Workers’ Comp Insurance Cost?

The cost of workers’ comp insurance varies depending on several factors, including your industry and the size of your business. Generally, the premium is calculated based on your payroll expenses and the level of risk involved in your operations. For example, higher-risk industries like construction or manufacturing tend to have higher premiums compared to lower-risk industries like retail or professional services.

The size of your business also matters. Small businesses with fewer employees typically pay a lower premium than larger companies. To get an idea of the cost, you can think of it as a percentage of your annual payroll expenses. On average, this percentage ranges from 1% to 5%. So, if your annual payroll is $100,000, you can expect to pay between $1,000 to $5,000 per year for workers’ comp insurance.

Want to save 20% or more on your workers’ compensation insurance? Take just five minutes to share some information about your business and get your competitive quote today.

How to Choose a Workers’ Comp Insurance Policy

Ensuring workers’ compensation insurance covers all the scenarios you need covered takes time, research, and ample patience. Workers’ compensation insurance costs can vary dramatically—taking the time to consider your options and solidify your approach can spare you from exorbitant costs and delays to the process.

Here are a few things to consider when choosing a workers’ comp insurance policy:

Understand Your State’s Requirements

Laws vary from state to state regarding the requirements for workers’ compensation insurance policies, so make sure you understand what your state requires before shopping for a solution.

Research Coverage Options

Once you understand the requirements of your state’s workers’ comp laws, research coverage options to determine which ones are best for your organization. Make sure to look at coverage limits and rates when making this decision.

Compare Quotes

Once you’ve narrowed down your coverage options, compare quotes from a variety of providers. Ensure the rates are compatible with your organizational goals.

Monitor Your Policy

After selecting a provider and buying a policy, monitoring and ensuring that your coverage limits are still appropriate is essential. Review your policy each year or after any major changes in your business.

Ask Questions

If you have any questions about your policy, don’t hesitate to ask for help. A knowledgeable agent from a workers’ compensation insurance company can provide insight into limits and rates and answer any questions you may have about the process.

How to Purchase Workers’ Comp Insurance for Your Business

Finding a workers’ compensation policy can be overwhelming. It’s not easy to sift through your options, understand the small differences between policies, and pick the best choice. Luckily, Southpoint offers an innovative product that takes the guesswork out of the process: CompWerks.

With CompWerks, you only need to spend five minutes entering some information about your business. Then, our automated quoting tool provides a quote from one of our insurance company partners. You can purchase your policy right away or work with one of our experts to choose the right quote. After that, you’re covered—it’s that easy.

CompWerks is completely free to use. You get access to the best workers’ compensation benefits on the market backed by our team of experienced insurance professionals, all with no hidden fees or extra costs. Plus, you get complimentary access to ThinkHR, a cutting-edge HR and compliance tool for businesses, for an entire year. Contact the insurance professionals at Southpoint to learn more.

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