Skip to main content

Own a Small Business? How to Protect Yourself and Your Employees

4 minute read

By Christopher Brown

Owning a small business is a way for entrepreneurs to do what they love, set their own schedule, and take command over their own lives. It can be a lot of responsibility and may require a substantial amount of time searching the internet for advice.

Providing for your employees can build loyalty, but it’s not all sunshine and rainbows. Of the infinite number of ways that things can run amok, workplace injuries are particularly insidious. Thankfully, there are experts you can hire, legal blogs you can explore, and state-led tools designed to protect you, your business, and your employees.

Today, we’re going to look at why workers’ compensation insurance is an essential part of any small business’ contingency plan, what it protects your business from, and how much you should expect to pay for it.

Andrey_Popov / Shutterstock

What Is Worker’s Compensation Insurance?

Whether time away from work is required or not, any injury or illness that happens at work, on company property, or while conducting company business is considered a workplace injury. The primary tool small business owners use to protect themselves and their employees in the wake of a workplace injury is workers’ compensation insurance, which is sometimes called workmans’ compensation.

Though your goal may always be to prevent accidents from ever occurring, avoiding them entirely isn’t always possible. As such, investing in a workers’ compensation policy is encouraged, and sometimes state-mandated, to ensure the protection of all parties involved.1

When Does Your Business Need Workers’ Compensation Insurance?

It’s a great question, and one that has a pretty simple answer.

Most business owners need to ensure that a policy is in place as soon as the first employee is hired. Many states mandate workers’ compensation insurance anyways, leaving you with little choice in the matter.

A quick online search is the only thing standing between you and learning about your state’s particular requirements. But even if your state doesn’t mandate workers’ compensation insurance, it’s wise to carry a policy in to ensure that you aren’t on the hook for any injury related medical bills and legal fees.

Why Workers’ Compensation Essential for Small Businesses?

If the word “insurance” causes your shoulders to tense up, then you’re in good company. But just imagine how much more tense you’d be the moment your uninsured small business is confronted with a workplace injury.

Human emotion aside, there are state laws surrounding workers’ compensation too. Sure, there are states where workers’ compensation insurance is left to the business owner’s discretion. However, there are tangible benefits to the business owner.2

It Protects Your Business

Workers’ compensation insurance protects more than just workers. In the event of a workplace injury, the insurance is designed to absorb the hefty costs associated with workplace injuries. This includes lost wages, medical fees, and the cost of long-term rehabilitation. Some policies even include liability insurance, which serves to protect your business in the off chance that an injured worker decides to sue.

How much protection your business receives depends on the situation, the state, and the policy. Regardless, a policy could save you from paying out of pocket for attorney fees, court costs, and even settlements.

Most Policies Include Death Benefits

Workers’ compensation is about more than protecting your business assets. It protects families from shouldering the financial burden associated with the sudden death of a loved one.

Fatal workplace accidents do happen, and when they do, workers compensation insurance steps in to provide what’s known as death benefits. The extent and nature of a policy’s death benefits can vary. Generally, these benefits have been known to help cover burial and funeral expenses, as well as provide financial support for the family of the deceased employee.

It Helps Injured Workers

As great as your intentions may be and as much as you want to help, you may lack the resources to provide an injured employee with all the financial help that they may need. These intuitive policies provide injured employees with a lifeline that grants them access to:

What Happens If You Don’t Have It?

Let’s say you don’t have workers’ compensation insurance for whatever reason and one of your employees sustains a workplace injury. What happens next? Nothing good.

You could be on the hook to pay a sizable noncompliance penalty directly to your state government. Your company would also be legally obligated to cover any necessary medical bills and foot any potential legal fees that arise from a lawsuit.

What Does It Cost?

It’s difficult to zero in on an exact cost without knowing more about your business. Payroll, location, number of employees, coverage limits, claims history, and industry related risk factors all contribute to the overall cost of a workers compensation insurance policy.

Some estimate a cost of $1 for every $100 that a business spends on payroll.3 Small businesses reflect a median monthly workers compensation insurance rate of $45.4 Again, this number can vary substantially. You’ll need to do more research on your own to receive a more accurate estimate.


There’s no such thing as being too prepared. You have safety measures in place designed to keep your staff safe. You’ve trained them well too. Still, there may come a time when you receive that dreaded phone call. Confronting the aftermath of a workplace injury or illness is made easier knowing that your business is armed with the appropriate insurance policy safeguards.

Don’t let this article be the end of the conversation. There’s still much to learn. Your state, industry, size, and risk factor all determine many of your next steps. Hopefully though, after taking the time to discover more, you’ll learn to embrace the essential nature of a workers’ compensation insurance policy and enjoy the security that its presence brings to your business.

Christopher Brown



The 5 Best Franchise Opportunities for Aspiring Entrepreneurs Featured-Finance

The 5 Best Franchise Opportunities for Aspiring Entrepreneurs

Are you looking to start your own business? The process isn’t easy – but if you choose to invest in and open your very own franchise, it could be a lot easier. A franchise allows you to open your own business and get it up and running. But you won’t be doing it alone. With […]

Read More about The 5 Best Franchise Opportunities for Aspiring Entrepreneurs

4 minute read

8 Simple Ways to Save Money This Summer Featured-Finance

8 Simple Ways to Save Money This Summer

Summer has a sneaky way of making us slow down and savor a more relaxed pace. For a lot of people, autumn can roll around before they realize that they’ve majorly overspent, leading to many anxious nights refreshing your online banking homepage until your account fills up again. Instead of living large on upscale cocktails […]

Read More about 8 Simple Ways to Save Money This Summer

4 minute read