State workers’ compensation laws require most employers to compensate employees for injuries, illnesses and injuries incurred on the job. Workers’ compensation insurance provides injured workers or their families with compensation for lost wages and pays survivor benefits and medical expenses, and funds rehabilitation programs.
Unlike other insurance policies, the main coverage section of a workers’ compensation policy, Part One, doesn’t have a dollar limit. That’s because the insurance company writing your coverage agrees to pay whatever the workers’ compensation regulations of your state stipulate your liability is as regards injuries to your employees.
Most workers’ compensation policies, however, have a Part Two, called employer’s liability that protects employers from lawsuits that employees may be entitled to bring against their employers under special, though mostly rare, circumstances. This coverage is usually limited to $1 million, but most umbrella policies can raise this limit.
If you operate in more than one state, your employees will be subject to the workers’ compensation laws of the state they work in and you will need to purchase coverage accordingly. Even if you do not have operations in other states, but your employees occasionally travel outside your state, you will need an endorsement to your policy, sometimes called an “all states endorsements,” to cover those situations where an employee is injured and may claim benefits under the jurisdiction of a different state.