Why do small businesses need workers’ compensation coverage? For one thing, most states require businesses that employ at least one person to maintain workers’ comp insurance. You can find information about the workers’ compensation laws in each state here. 

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Beyond fulfilling legal obligations, however, workers’ comp insurance provides a number of direct benefits to both injured/ill employees and their employers. At the top of that list of benefits, of course, is covering medical expenses, including physician appointments, procedures, and pharmaceuticals, as well as expenses related to ongoing treatments and/or funeral expenses in the unfortunate event that they are required. 

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Workers’ compensation often also provides some amount of disability coverage should the injury/illness preclude an employee from working, although additional supplemental disability insurance, particularly of the long-term variety, are advisable to make managing finances and the disability at the same time more feasible. 

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With workers’ comp coverage to cover these expenses, employers aren’t on the hook to cover them, which can be a tough ask for smaller and earlier stage companies that often don’t have the resources readily available to do so. 

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You can read more about how workers’ compensation coverage serves the interests of both employees and employers here.