Workers' compensation is a government-mandated system that pays monetary benefits to workers who become injured or disabled in the course of their employment. Workers' compensation is a type of insurance that offers employees compensation for injuries or disabilities sustained as a result of their employment.

In general, workers' comp covers legal expenses and lost-income benefits as well. Occupational accident insurance, or OAI, is an insurance option that provides both employees and their employers a certain level of financial protection in case of an injury incurred on the job.


Workers’ compensation is a form of insurance that pays workers who are injured or become disabled as a result of their job. 
Accepting workers’ comp benefits means the employee waives the right to sue their employer. 
Most compensation plans offer coverage of medical fees related to injuries incurred as a direct result of employment. 
Workers’ comp is not the same as unemployment benefits or disability insurance. 

How does worker's compensation work?

By agreeing to receive workers' compensation, workers also agree to give up their right to sue their employer for negligence. This "compensation bargain" is intended to protect both workers and employers. Workers typically give up further recourse in exchange for guaranteed compensation, while employers consent to a certain amount of liability while avoiding potentially greater damage of a large-scale negligence lawsuit. All parties (including taxpayers) benefit from avoiding the legal fees needed to process a trial.

Most compensation plans offer coverage of medical fees related to injuries incurred as a direct result of employment. For example, a construction worker could claim compensation if scaffolding fell on their head, but not if they were in a traffic accident while driving to the job site. In other situations, workers can receive the equivalent of sick pay while they are on medical leave. If a worker dies as a result of their employment, workers' compensation also makes payments to their family members or other dependents. 

Employees are legally entitled to protection from the financial cost of an accident that occurs while on the job.  If you pay your employees and give them a W-4, your state requires you to carry this insurance.  


The worker's compensation policy will pay the medical bills, a portion of lost income, and protect your company from possible lawsuits filed by injured employees.  Owners, officers, and partners may be included according to the legal structure of your business.

Whether you employ less than 10 people or over 1000, your loss experience, which is collected by the Workers Compensation Bureau, directly impacts your premium by assigning an experience modifier. 


This is why you need an insurance partner that understands your business and will work with you to control exposures that cause losses.

At the end of the policy year, the insurance company will audit to ensure accurate payroll- as it is the basis of the premium, and you may have a premium adjustment.