Different Workers Compensation Programs

What is workers compensation insurance

What is workers compensation insurance, and who pays for it? Workers comp systems vary by state. Employers typically pay for this type of insurance. This is done through state premiums, insurance companies or directly to workers. Therefore, your benefits as a worker may come from the state government, an insurance company or your employer depending on the system and decisions your employer makes.

State Programs

Many states offer workers compensation insurance through a state-run program. Employers have a choice of paying premiums to the state. Many small businesses and industries with few injuries choose to go this route. In this way, the state acts as the insurance company and pays any benefits owed to injured employees.

Insurance Companies

Workers compensation insurance is purchased from private insurance companies in most instances. Although most states allow employers to obtain insurance in this fashion, not all states allow it. Benefits paid out to employees would come directly from the insurance company in this instance.


A select few businesses will choose to go the self-insured route. This can potentially end badly for a company. Most states do require that a business show proof that they can cover the expected workers’ compensation liability. States may even require oversight on their part to ensure proper procedures are followed.

What is workers compensation insurance, then? It is a type of insurance paid for by employers that pay benefits to employees injured during work-related activities.