What Is Workers’ Compensation Insurance?

Key Takeaways

• Workers’ compensation insurance takes care of medical treatments, makes up for lost income and provides disability or death benefits if an employee becomes ill or is injured or killed while performing the duties of their job.
• Injured workers will often receive 60% to 67% of their weekly income each week that they are eligible to collect workers’ compensation benefits.
• The cost of workers’ compensation insurance predominantly depends on your payroll, your claims history and the level of risk associated with businesses in your industry.
• Most businesses are required by law to maintain workers’ compensation insurance in every state except for Texas, where coverage is still required for construction businesses contracting with a government entity.
• Four states require businesses to receive workers’ compensation coverage through a state fund rather than a private commercial insurance company.

Thumb

75 weeks

Index finger

45 weeks

Middle finger

40 weeks

Ring finger

25 weeks

Pinky

20 weeks

Big toe

35 weeks

Any other toe

10 weeks

Hand

200 weeks

Arm

240 weeks

Foot

144 weeks

Leg

200 weeks

Eye

120 weeks

Hearing loss in one ear

70 weeks

Hearing loss in both ears

150 weeks

Back

300 weeks

Serious facial or head disfigurement

Until you receive $20,000 in total

Serious body disfigurement

Until you receive $15,000 in total

Any other body part

Until you receive $20,000 in total

Exposure to harmful substances or environments

634,080

Overexertion and bodily reaction

521,350

Falls, slips and trips

450,540

Contact with objects and equipment

450,050

Violence and other injuries by people or animals

85,410

Transportation incidents

85,000

Fire and explosions

3,190

Alabama

Five

Sole proprietors, domestic workers, farm laborers and casual employees

Alaska

One

Sole proprietors, partners, nonprofit executive officers, members of a member-managed LLC, part-time babysitters, non-commercial cleaners, harvest help and similar part-time help, amateur sports officials, contract entertainers, commercial fishers and taxi drivers compensated by contractual arrangement

Arizona

One

Sole proprietors without employees, working partners, independent contractors, casual employees and domestic workers

Arkansas

Three

Farm laborers and real estate agents

California

One

Sole proprietors without employees and directors and officers who fully own the corporation they work for

Colorado

One

Sole proprietors, corporate officers of corporations and members of LLCs, casual employees who do less than $2,000 worth of repair work per year, part-time domestic or maintenance workers, real estate agents and brokers paid by commission, independent contractors without employees and drivers for contract carriers

Connecticut

One

Corporate officers, LLC members, partners, sole proprietors and people who work in or around a private home for 26 hours or less per week

Delaware

One

Farm workers and independent contractors

District of Columbia

One

Sole proprietors without employees and domestic workers who work less than 240 hours per year

Florida

One (construction businesses), six (agricultural businesses with regular employees), 12 (agricultural businesses with seasonal employees who work at least 30 days) or four (other businesses)

Corporate officers, LLC members, sole proprietors and partners outside of the construction industry

Georgia

Three

Sole proprietors and partners

Hawaii

One

Sole proprietors, partners, domestic workers who make less than $225 per year, some 25% shareholders, all 50% shareholders and real estate agents paid by commission

Idaho

One

Sole proprietors plus family members who live in their households and work for them, domestic workers, pilots of agricultural planes, real estate agents paid by commission and casual employees who work irregular hours in a different field than the employer’s primary business

Illinois

One

Sole proprietors without employees and employers of family members who live in their households, are corporate officers or work for an agricultural business that employs workers for a combined total of less than 400 days per year

Indiana

One

Sole proprietors, partners, LLC members, corporate officers and independent contractors

Iowa

One

Sole proprietors, LLC members, domestic workers who make less than $1,500 per year, agricultural exchange laborers, family farm corporation officers and agricultural employers with a payroll below $2,500 per year

Kansas

Based on payroll ($20,000) rather than number of employees

Sole proprietors, partners, LLC members, independent contractors without employees, agricultural employers and family members who own less than 10% of the business

Kentucky

One

Sole proprietors, partners, LLC members, independent contractors, farm workers, domestic workers in a home with fewer than two full-time employees and employees covered by federal laws such as railroad and maritime workers

Louisiana

One

Sole proprietors, partners, LLC members, corporate officers, dusting and spraying airplane crews, real estate brokers and agents, musicians and performers, employees covered by federal laws, unpaid officers and board members of certain nonprofits and people who work in exploring, developing, producing or transporting minerals

Maine

Seven (agriculture and aquaculture businesses) or one (other businesses)

Sole proprietors, partners, LLC members, domestic workers and employers of casual or seasonal laborers in the agriculture and aquaculture industries

Maryland

Three (agriculture businesses) or one (other businesses)

Sole proprietors, agricultural employers with a payroll below $15,000, agricultural office workers, independent contractors on farms and owner-operators of large tractor-trailers

Massachusetts

One

Sole proprietors, partners, LLC members, domestic workers who work fewer than 16 hours per week, people who work in interstate or international commerce, real estate agents and other consumer goods salespeople paid by commission and taxi drivers who lease their cabs on a fee basis

Michigan

One

Sole proprietors, some partners and corporate officers who are shareholders of closely held corporations and some family members of the employer

Minnesota

One

Sole proprietors, partners, some LLC managers, officers of closely held corporations, some family members of the employer, family farm operations and employers covered by federal liability laws

Mississippi

Five

Sole proprietors, partners, corporate officers, independent contractors, domestic workers and farm laborers

Missouri

One (construction businesses) or five (other businesses)

Sole proprietors, partners, LLC members, family members of the employer, domestic workers, farm members, real estate agents and owner-operators of commercial motor carriers

Montana

One

Sole proprietors, independent contractors, domestic workers, casual employees, freelancers, newspaper carriers, licensed barbers and cosmetologists working on contract, petroleum land professionals and real estate, securities and insurance agents paid by commission

Nebraska

One

Sole proprietors without employees, independent contractors, domestic workers, some agricultural employees, federal employees, railroad employees and most volunteers

Nevada

One

Sole proprietors without employees, domestic workers, casual employees who work for fewer than 20 days and make less than $500, agricultural and horticultural laborers, people working in interstate commerce, non-construction employees working temporarily in Nevada who are covered in another state and employees covered by private disability and life insurance plans

New Hampshire

One

Sole proprietors, partners, self-employed businesspeople and corporations and LLCs with three or fewer executive officers or members and no additional employees

New Jersey

One

Sole proprietors without employees

New Mexico

One (construction businesses) or three (other businesses)

Sole proprietors, domestic workers, real estate agents and farm or ranch laborers

New York

One

Sole proprietors and partners without employees

North Carolina

One (businesses where employees risk exposure to radiation), 10 (agriculture businesses) or three (other businesses)

Sole proprietors, partners, LLC members and domestic workers

North Dakota

One

Sole proprietors, partners, corporate officers, independent contractors, domestic workers, farm and ranch laborers and children of the employer under the age of 22

Ohio

One

Sole proprietors, partners, LLCs acting as sole proprietors or partnerships, family farm corporate officers and individuals who have incorporated and don’t have any employees

Oklahoma

Six (businesses where all employees are related to the employer by blood or marriage) or one (other businesses)

Sole proprietors, partners, LLCs, corporate officers, licensed real estate brokers, most domestic workers and some agricultural and horticultural workers

Oregon

One

Sole proprietors

Pennsylvania

One

Sole proprietors, partners, corporate officers, licensed real estate or insurance agents or brokers paid by commission, domestic workers, casual employees, outworkers, farmers with only one employee who works for less than 30 days or earns less than $1,200 per year, farmers’ spouses and farmers’ children under the age of 18

Rhode Island

Four

Sole proprietors, partners, independent contractors and some real estate agents, domestic workers and agricultural laborers

South Carolina

Four

Sole proprietors, partners, LLC members, agricultural employees, some real estate agents paid by commission, textile companies, railroad companies and employers with an annual payroll below $3,000

South Dakota

One

Sole proprietors, partners, corporate officers, LLC members, domestic workers who work less than 20 hours per week and less than six weeks per 13-week period, agricultural laborers, real estate agents and independent contractors including certified truck owner-operators

Tennessee

One (construction and coal mining businesses) or five (other businesses)

Sole proprietors, partners and LLC members

Texas

Coverage not required

Construction companies contracting with the government

Utah

One

Sole proprietors, partners, LLCs, agricultural laborers, domestic workers, casual employees and real estate brokers

Vermont

One

Sole proprietors, partners, corporate officers, LLC members, casual employees who work in a different field than the employer’s primary business and agricultural employers with a payroll below $10,000

Virginia

Two

Sole proprietors, partners, LLCs and independent contractors

Washington

Two (employers of domestic workers who work more than 40 hours per week) or one (other businesses)

Sole proprietors, partners, corporate officers, LLC members, private residential gardeners and maintenance or repair workers, family farm laborers under the age of 18, musicians and entertainers at specific events and cosmetologists and barbers who rent or lease their workspace

West Virginia

Five (agricultural businesses), three (casual employers) or one (other businesses)

Sole proprietors, partners, corporate officers, LLC members, independent contractors, domestic workers, employees covered by federal laws, organized professional sports employees who participate in sporting activities and churches

Wisconsin

Six (farmers employing multiple people on the same day for at least 20 days per year), one (employers who pay a full-time or part-time employee $500 in combined gross wages per quarter) or three (other businesses)

Sole proprietors, partners and LLC members

Wyoming

One

Sole proprietors, partners, corporate officers, LLC members, domestic workers, casual employees, independent contractors, a spouse and dependents living in the employer’s household and child caregivers and babysitters whose wages are subsidized or paid in full by the Department of Family Services