Small business owners need several types of insurance to protect their assets and reduce risk.

By Dan Killins

Workers’ compensation insurance is required by law in most states since it protects business owners and employees in the event of an on-the-job injury or illness. Without it, small business owners could be held liable for an injured employee’s medical bills and lost wages.

Here are four important things every small business owner should know about workers’ compensation insurance and workplace safety:

Workplace Injuries Happen in Every Industry

Employees may be susceptible to injuries in any industry, not just those that are high-risk such as manufacturing or construction. For instance, housekeeping staff at a bed and breakfast could suffer back pain if they make beds improperly. Restaurant kitchen workers face greater risks for potentially serious cuts or lacerations if they use inadequately maintained tools or lack proper training on how to handle knives or appliances correctly. Even desk workers can suffer from slips, trips and falls or even repetitive motion strains that can lead to time away from work.

Workers’ Compensation Is Required in Most States

In most states, businesses are mandated by law to have workers’ compensation insurance.

Be sure to understand the exact regulations in the state you operate in by reviewing your state’s workers’ compensation website. Failure to carry workers’ compensation insurance or otherwise meet a state’s regulations can leave an employer exposed to paying penalties levied by the state.[1] Business owners who operate in multiple states, or have employees who work in multiple states, should consult with an insurance agent to confirm they have proper insurance coverage in each state.

Agents and Brokers are a Good Resource

The number of options can be overwhelming to even a well-informed small business owner. Insurance agents and brokers can help you navigate the options and provide guidance on the best policies to protect your business. They can also share ways to implement safety controls that can help business owners manage costs, protect your assets and minimize risk.

There are all types of insurance agents and brokers that focus on different vertical sectors, business sizes and insurance specialties. Look for an agent or broker who is knowledgeable about your industry and understands workers’ compensation requirements in the jurisdiction(s) applicable to your business.

Workers’ Compensation Is One Piece of a Larger Risk Management and Safety Strategy

While having the right workers’ compensation insurance is essential for all small businesses, it is one piece of a larger safety and risk management strategy. Successful safety plans may vary from company to company, but most have a few common key elements, including identification of potential safety hazards in the workplace, development of policies and procedures to help mitigate risks, consistent implementation of the correct procedures, and a feedback loop to correct errors when they occur. Committing to a safety plan can help increase productivity, control workers’ compensation claims costs and mitigate risk, according to the Occupational Safety and Health Administration.[2]

As a small business owner, you want your employees to have a safe environment, so they can stay healthy and productive. Workers’ compensation insurance is one important form of protection that safeguards employers and helps employees in the event of a workplace injury.

Dan Killins is Loss Control Program Manager for EMPLOYERS®, America’s small business insurance specialist®, which offers workers’ compensation insurance and services through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company, and Employers Assurance Company. Not all insurers do business in all jurisdictions. EMPLOYERS® and America’s small business insurance specialist® are registered trademarks of Employers Insurance Company of Nevada.

The information provided is intended to provide a general overview.  This information is not legal advice and should not be relied on as such. EMPLOYERS® makes no warranties for the accuracy, adequacy, or completeness of the information provided, and will not be responsible for any actions taken based on the information contained herein. If you have legal questions or need legal advice, please consult an attorney. 

[1] Work Comp Lab, “Workers’ Compensation Insurance Laws and Penalties.” Retrieved on 6/30/2019 from

[2] Safety and Health Add Value. Occupational Safety & Health Administration. Retrieved on June 30, 2019 from

Workers’ Compensation stock photo by zimmytws/Shutterstock