Figuring out all of the logistics of starting a small business can be daunting. It’s one thing to have the vision and the drive to start a business, but it’s another thing entirely to navigate the legal maze of paperwork and obligation. For some, Worker’s Compensation might seem like an unnecessary added expenditure. However, having this insurance can prove beneficial in the long run. In some states, it may even be required.
What exactly is worker’s compensation?
Worker’s compensation insurance ensures that employees who are injured on the job are able to get the medical care they need. In some cases, missed wages are even compensated. This insurance will pay regardless of who was at fault for the injury. In exchange for the guaranteed benefits, employees have limited rights to sue employers for damages incurred.
According to Edward Lake, a worker’s compensation lawyer, “Private industry employers in the U.S. reported nearly 3 million nonfatal workplace injuries and illnesses in 2012 alone, accounting for an incidence rate of 3.4 cases per 100 equivalent full-time workers.”
Is worker’s compensation insurance required?
Regulations vary from state to state, but Square Inc. said that a general commonality among states depends on the number of employees, the type of business, and the type of work. Overall, most states do require businesses to have worker’s compensation insurance. If the business is a sole proprietorship, a worker’s compensation policy may be optional until employees are listed that are not also owners.
Where can worker’s compensation insurance be obtained?
States vary on where worker’s compensation insurance can be obtained. As of 2017, the following states required businesses to purchase worker’s compensation insurance directly through the state government: North Dakota, Ohio, Washington, and Wyoming.
In other states, worker’s compensation insurance can be purchased from a variety of sources. Traditional insurance companies are a good place to start, however accounting and payroll software often provide worker’s compensation insurance options as well. 
How much does worker’s compensation insurance cost?
Insurance premiums for worker’s compensation insurance vary depending on the type of business and number of employees. Typically, jobs that are considered to be more dangerous will have a higher premium.  
Some insurers will adjust premium charges according to current payroll employee numbers, which could result in some savings. Purchasing insurance from whoever does payroll will ensure that coverage is up to date, and the premiums will likely adjust with the number of employees.
According to Insureon, in 2014 the least expensive state to purchase worker’s compensation insurance was Texas, at $.75 per $100 in employee wages. Alaska came in as the most expensive state at $2.74 per $100 in employee wages.
After a business has been open for some time, insurance rates can increase or decrease depending on accident history, which is very much like any other type of insurance. This provides great motivation for businesses to provide a safe working environment and to encourage safe work practices.