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Workers Compensation Insurance


Workers Compensation Insurance or Workers Comp is insurance that protects workers injured on the job. Workers compensation insurance also protects employers by limiting litigation. Each state its own requirements for workers compensation. Insurance is purchased by employers through private insurance companies or state-administered workers comp programs. However, North Dakota, Ohio, Washington and Wyoming require workers compensation to be purchased through the state’s workers compensation fund.  This applies even to companies who have multi-state policies for employees in other states.

Read our guide to Business Liability Insurance for an overview of insurance that protects you from claims from customers or other third parties.

When is Workers Comp Insurance Required

Workers Compensation is required in many states as soon as you hire your first employee. It is critical that you check with your state before hiring your first employee (full-time or temporary). Insureon has a great resource (here) that breaks down the requirements for each state.

What Does Workers Compensation Cover

  • Medical Bills for injuries and illnesses
  • Lost Wages
  • Long-Term Care
  • Funeral Expenses and Death Benefit
  • Legal Fees if the Employee Sues


*Check with your state and insurance carrier as coverage requirements will vary among states.


Top 10 Insurance Companies that Issue Workers Compensation Insurance Coverage



Rank Insurer 2015 Premium (MM) 2015 Market Share
1 Travelers Group 4,467 7.81
2 Hartford Group 3,324 5.81
3 Zurich Ins. Group 2,859 5.00
4 AmTrust Group 2,744 4.8
5 AIG 2,559 4.48
6 Berkshire Hathaway 2,482 4.34
7 Liberty Mutual Group 2,481 4.34
8 State Ins. Fund of NY 2,437 4.26
9 State Comp. Fund of CA 1,638 2.87
10 Old Republic Group 1,444 2.53

A Brief (Painful) History of Workers Compensation


The history of worker compensation goes back over 4000 years. A 1999 article by  Gregory Guyton in the Iowa Orthopaedic Journal (read here) notes the first written records of workers compensation law was in ancient Sumeria, present-day southern Iraq around 2050 B.C. Per the author, “The law of Ur provided monetary compensation for specific injury to workers’ body parts, including fractures.” The article notes that compensation was generally based on the type of injury. A  lost finger was valued twice as much as a lost thumb. Interesting enough workers who lost part or all of their manhood was compensated by the length of manhood loss. One imagines compensation varied according to the case.

Workers Compensation and the Industrial Revolution

The transition from manual labor to factories that produced goods in mass quantities fueled a higher standard of living and advances in society. The dark side was that the working conditions of many of the industries were very hazardous. Workers had little to no protection. English Common Law principles are known as the “Unholy Trinity” (Guyton, 1999) made it very restrictive for workers to receive workers comp.  Workers were not eligible for workers compensation if any of the circumstances below applied.

  1. Contributory Negligence. Example: Worker slipped and fell into a cauldron of hot oil.
  2. The “fellow servant” rule: A coworker slipped and pushed you into a cauldron.
  3. The assumption of Risk: Principle that workers knew what risk was inherent in a given job. Many employers had workers sign contracts giving up their rights to worker’s compensation.


Workers Compensation in the Modern Era


The framework of today’s worker compensation owes its origins to the  Employment Liability Law of 1871 and the Workers Accident Insurance Law of 1884. Both laws were instituted by Chancellor Otto von Bismarck of Prussia in response to public pressure and to weaken his political enemies who were pushing for reforms. [1] In America, workers compensation rights move a little slower. In 1911, was the first state to pass workers compensation. Over the next 37 years, other states followed suit with Mississippi being the last to state to pass workers compensation legislation in 1948.

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