Workers Compensation Insurance
Required state-mandated coverage that pays medical bills and lost wages for employees injured on the job.
Workers Compensation (Workers Comp, or WC) is a state-mandated insurance that covers employees injured or made ill from work. It pays for medical treatment, partial wage replacement during recovery, vocational rehabilitation, and death benefits. In exchange, employees generally cannot sue their employer over workplace injuries — this is the "grand bargain" that defines workers comp.
Illinois, Indiana, and Wisconsin all require workers comp the moment you have employees (with very narrow exceptions for sole proprietors and certain agricultural businesses). Penalties for going without it are severe: in Illinois, willfully operating without workers comp can result in $500-$10,000 daily fines plus criminal liability for executives.
Workers comp premiums are calculated as: gross payroll × class code rate × experience modifier. Class codes vary wildly by industry — clerical workers might be rated at $0.20 per $100 of payroll, while roofers can hit $30+ per $100. Your "experience mod" (X-Mod) compares your loss history to industry average; a track record of low claims earns you a discount.
If you have only 1099 contractors and no W-2 employees, you may not need workers comp — but the IRS and state employment commissions are increasingly aggressive about reclassifying contractors as employees. Geneva can review your situation.
Related terms:General Liability Insurance·Professional Liability (E&O) Insurance