Workers’ Comp Insurance: What Every Employer Should Know

Running a business means taking care of your people — and that includes protecting them if they get hurt on the job. That’s where Workers’ Compensation Insurance (commonly called workers’ comp) comes in.

Whether you’re hiring your first employee or growing a team, this guide explains what workers’ comp covers, when it’s required, what happens if you skip it, how premiums are set, and how claims work.

What Does Workers’ Comp Insurance Cover?

Workers’ comp provides financial protection for both employers and employees when a work-related injury or illness occurs. It covers:

• Medical Expenses: Covers hospital bills, surgeries, doctor visits, prescriptions, and ongoing care for work-related injuries or illnesses.
• Lost Wages: Replaces a portion of an employee’s income (typically around 66%) while they recover and cannot work.
• Rehabilitation Services: Covers physical therapy, occupational therapy, or retraining programs if the employee can’t return to their original job right away.
• Disability & Death Benefits: Provides financial support for long-term or permanent disability — or survivor benefits to a family if the worker dies from a job-related cause.

When Is Workers’ Comp Required?

Workers’ comp laws vary by state, but here are the general rules:

Based on State Law

Each state sets its own requirements. In most states (including NC, SC, and GA):

• You must carry workers’ comp if you have 3 or more employees (NC & SC).
• In Georgia, it’s required once you have 3 or more regular employees, including part-time workers.

Covers All Types of Employees

This includes full-time, part-time, seasonal, and sometimes subcontractors — depending on state law.

Exceptions May Apply

• Sole proprietors and LLCs with no employees are often exempt (but can opt in).
• Independent contractors may not be covered unless misclassified.

Tip: Always check your state’s Department of Labor or Workers’ Comp Board for the most current rules.

What Happens If You Don’t Have It?

Not having required workers’ comp can lead to serious consequences, including:

• Fines and penalties from state agencies
• Lawsuits from injured employees
• Out-of-pocket costs for medical bills and lost wages
• Possible shutdown of your business or loss of business licenses

In some states, employers can even face criminal charges for non-compliance.

How Are Workers’ Comp Premiums Determined?

Your insurance cost is based on a few key factors:

• Industry Risk: High-risk industries like construction or manufacturing pay more than lower-risk fields like design or consulting.
• Payroll Size: The more employees and higher your payroll, the higher your premium. Rates are typically calculated per $100 of payroll.
• Job Roles: Different jobs have different risk levels — for example, office workers cost less to insure than warehouse workers.
• Claims History: Businesses with a clean safety record may qualify for lower rates.

How the Workers’ Comp Claims Process Works

When an employee is injured on the job, here’s how a typical claims process works:

1. Employee Reports the Injury
   They must notify you promptly (within state-mandated time limits, often within 30 days).
   
2. Employer Files a Claim
   You submit a report to your workers’ comp insurance provider and possibly to the state agency.
   
3. Medical Treatment Begins
   The employee sees an approved doctor and receives necessary care.
   
4. Insurer Reviews the Claim
   They investigate and determine whether to approve benefits based on documentation.
   
5. Employee Receives Benefits
   If approved, payments begin for lost wages and medical costs.
   
6. Return-to-Work or Rehab Plan
   If needed, the employee may receive retraining or light-duty assignments.

Final Thoughts

Workers’ compensation insurance isn’t just a legal requirement — it’s smart risk management. It protects your team, keeps your business compliant, and shields you from costly lawsuits. As your startup grows, having a workers’ comp policy in place is a sign of professionalism, responsibility, and long-term thinking.