Workers’ compensation helps to protect your business from the financial consequences of liability if an employee is injured or becomes ill as a result of the job. It can cover an employee’s expenses due to work-related illness or injury, like medical expenses, rehabilitation and training, lost wages, permanent or temporary disability and, in the worst of scenarios, death benefits.

But the rules about workers’ comp insurance aren’t always clear-cut. The laws outlining who needs coverage and how to get it vary by state, which can add to the confusion. But we’re here to help you clear it up. Learn more about how to get workers’ compensation insurance so you can run your business with peace of mind.

Who needs workers’ compensation insurance?

Similar to general liability insurance and professional liability insurance policies, workers’ compensation is beneficial for anyone running a business, including small business owners with full or part-time employees.

But why?

Accidents and injuries can happen no matter your line of work, from dog walking to roofing. Whether you’re working alone or have a team working with you, knowing you have coverage for work-related injuries and illnesses can give you peace of mind. If anything happens, no one will have to worry about getting the medical care they need or losing their regular wages while in recovery, including you!

As a business owner, workers’ comp insurance also helps to protect your business from high out-of-pocket costs, lawsuits, and just plain stress. That’s why even when it’s not required in your state, workers’ comp is often a wise investment. Also, if you are legally exempt from workers’ compensation requirements, clients may still require it — even if you are a sole proprietor or an individual with no employees.

In most cases, however, workers’ comp insurance is mandatory. Every state except Texas has requirements regarding workers’ comp. Most often, if you have employees, you will need to have coverage in place to stay compliant.

Where to get workers’ compensation insurance

Workers’ comp laws vary by state. Federal regulations about Workers’ Compensation only apply to certain federal employees and to employees in the District of Columbia, so you’ll have to review your state’s laws when starting any new type of business.

In most cases, workers’ compensation coverage will be required when you hire your first employee. However, some states offer exemptions based on how many employees you have, who the employees are (e.g., family members, corporate officers, etc.), what type of work they do, and more.

Ready to sign up? The way you go about getting worker’s comp insurance will also depend on where you live. Here are the basics:

Monopolistic states

If you live in one of the four monopolistic states (Ohio, North Dakota, Washington, and Wyoming), you are required to purchase workers’ comp insurance from a government-operated state fund. The sale of workers’ comp from private insurers is prohibited.1 You will not be able to package Employer’s Liability coverage with your workers’ compensation coverage in these states, so remember to talk to your insurance agent about getting this coverage on another policy.

Voluntary market

The most common route for most small business owners (in the 47 non-monopolistic jurisdictions) is to shop for workers’ comp from private insurance companies in the voluntary market.

Private insurers are regulated by the state but create their own insurance offerings, rates, and eligibility requirements. Employers can often apply for coverage through an agent, broker, or directly with the company, and insurers will approve or deny their application. Rates are often competitive, but it can be difficult to obtain workers’ compensation insurance if your business is considered high-risk.

Here’s a helpful tip: Compare at least three workers’ comp insurance offerings to find one that offers the best value for the coverage you need.

Residual market

The residual market is for companies that could not otherwise get a policy in the voluntary market. This could be for a variety of reasons, including an unfavorable claims history, engaging in hazardous work, or the company simply does not have a track record of continuous coverage.

Being that workers’ comp is often mandatory, each state government offers one or more of the following insurance options to guarantee employers access to coverage:

  • Competitive state-funded programs: Workers’ comp is sometimes offered through government-funded organizations that compete with private insurers on the voluntary market. These programs may have more lenient eligibility requirements so this can be an option if employers are denied by private insurers.
  • State-assigned risk plan: This plan is administered by the National Council on Compensation Insurance (NCCI). While generally more expensive and subject to rate increases, it can provide business owners with a state-approved workers’ compensation policy, when they don’t have any other options.2
  • State-assigned risk mechanism (non-NCCI): This is a program administered by the state (or an organization on behalf of the state, which is not NCCI) to help employers get coverage when they’ve been denied elsewhere.

In many cases, you’ll only resort to the residual market if you were denied by insurers on the voluntary market. However, you may want to consider policies from competitive state-funded programs even if you are approved by private insurers.


Lastly, many states allow you to self-insure individually or by joining a group. To self-insure on your own, you typically have to prove financial strength to qualify. Then, you can pay benefits to injured employees out of your assets. To self-insure with a group, several employers pool their liabilities, and all must meet agreed-upon underwriting requirements.

How to file a workers’ comp claim

For an employee to receive benefits for an on-the-job illness or injury, you will need to follow your state’s rules for filing a workers’ comp claim. It’s important to note that you have a limited amount of time to file a claim, so it’s critical that your employees are trained to report a work-related injury to you immediately. For example, in New York, employers must report a claim on or before the 18th day after the workplace injury or illness occurred, or within 10 days after the employer learns of the event — whichever period is greater.3

Once you learn of an employee injury, make sure your employee gets medical attention immediately, if they haven’t already. After that, the process will often vary by state so be sure to check the requirements of your state’s workers’ compensation board. Generally, though, the process involves the following steps:

  1. Give your employee a workers’ comp claim form to fill out and return to you.
  2. Submit the claim form to your insurance carrier. In some states, you may also be required to report the injury to your state’s division of workers’ compensation or workers’ comp board.
  3. Make sure your employee’s medical provider also completes and submits a report on the injury or illness.

Once these steps are completed, the insurance company will either accept or deny the claim. If the claim is accepted, you will be notified by the insurer, which will also contact the employee about the benefits they can expect to receive. If the claim is denied, however, you have the right to request reconsideration from the insurance company or to file a formal appeal, which usually occurs through your state workers’ comp board or commission.

How to get workers’ compensation insurance for your business

Interested in adding workers’ comp to your business insurance lineup? Smart move. While professional liability insurance protects you against the financial consequences of errors and omissions in your providing professional advice, and general liability insurance protects you if you have third-party claims from clients and customers, workers’ comp fills the important gap of protecting you and your employees in the event of work-related illness or injury.

A good first step is to check the requirements in your state. From there, depending on your state’s laws, you can either sign up with your state program or shop around with private insurers to find the right fit for you. Then, you can start focusing on why you started your business in the first place — providing top-notch products and services to your customers. Leave your email and we’ll let you know when workers’ compensation insurance via Thimble is available in your area.


  1. The Balance Small Business, Workers’ Compensation Insurance in Monopolistic States.
  2. National Council on Compensation Insurance (NCCI), NCCI’s Workers’ Compensation Insurance Plan State Instruction Pages (WCIP).
  3. New York Workers’ Compensation Board, Your Responsibility as an Employer.