World Trades

Finance Blog

Workers Compensation Coverage

2 min read

If you have employees, then you need a workers’ compensation policy. Here’s what you’ll need to know about workers’ compensation coverage in order to keep your business safe and sound.

What Is Workers’ Compensation?

Workers’ compensation is an insurance program designed to help employers pay for medical expenses, rehabilitation services, and other expenses associated with the injuries of employees. Employers who don’t have a workers’ compensation policy may be responsible when their employees are hurt or disabled on the job.

Who Does Workers’ Compensation Cover?

Workers’ compensation covers any employee who is injured while working for you. This includes part-time, full-time, and temporary employees, as well as independent contractors and volunteers who provide services to your business. It also includes children under 18 years of age who are injured while performing work-related activities on your behalf.

How Do I Obtain Workers’ Compensation?

Every employee covered by workers’ compensation must have a certificate of coverage. You may obtain a certificate from the state in which you live or from the state in which you operate your business. The certificate is renewable each year, and to obtain coverage, you will need to pay your workers’ compensation premiums. There are some states that require employers to carry workers’ compensation insurance, but in most cases it is optional.

What Is The Tax Deductibility Of Workers’ Compensation?

There are two types of workers’ compensation benefits: insurance and indemnity. “Insurance” benefits are tax deductible when they reduce your taxable income. Payment of insurance benefits reduces your taxable income to what you would have received had you not paid the insurance benefits. Conversely, if an employee is given “indemnity” benefits in addition to their regular wage payments, they cannot deduct those insurance amounts from their gross income.

What About State Workers’ Compensation?

There are a few states in which the state operates a workers’ compensation insurance fund in lieu of private insurance programs. In such cases, the state operates as an insurer of last resort for injured employees. You will want to check with your state’s Department of Labor to see if they offer this benefit to employers.

Do I Need Workers’ Compensation Coverage?

Every business that has employees should have workers’ compensation coverage as a financial protection in case of an injury. Even if you operate your business as a sole proprietorship, partnership, or corporation, you are required to have adequate workers’ compensation coverage. Under the law, employers who do not have adequate insurance can be held responsible for medical bills and lost wages incurred by injured employees.


Workers’ Compensation Coverage is a great option to protect your employees, to make sure they are compensated for any injuries that happen while working. Workers’ Compensation is insurance, so any time your employee gets hurt on the job, your company will not be held responsible.