If you run a business--no matter what the size--that employs other workers, then you'll want to have insurance coverage for workers compensation. Specifically, this coverage is meant to help pay for the aftermath of injuries or illnesses that your employees sustain on the job. Before you pay for this type of coverage, however, you and your HR team will want to have a fair understanding of what workers compensation means for your business.

What it Covers

First of all, you'll need to know what workers compensation is designed to cover. This way, in the event that an employee is injured on the job, you'll be able to take the necessary steps based on how the injury occurred. Generally, any type of injury or illness that occurs within the confines of your workplace is eligible for coverage. This could include anything from an employee accidentally falling off a ladder to a gradual medical condition (such as carpal tunnel) that the employee develops as a result of typing on the computer for one's work duties.

Even some injuries outside of your physical place of business could be covered under workers compensation, such as injuries sustained while an employee is traveling on official business to an industry trade show.

What it Doesn't Cover

Just as it's important to understand what's covered by workers compensation, you should also be aware of what's generally not covered so you can save yourself (and your employees) the time and hassle of filling out unnecessary paperwork. Typically, independent contractors and employees that have been laid off or let go aren't eligible to collect workers compensation benefits. Furthermore, self-inflicted injuries, injuries that occur while an employee is under the influence of drugs or alcohol, and injuries incurred as a result of a fight started by an employee aren't covered.

Employer Responsibilities

Aside from carrying insurance that provides workers compensation coverage, it's also your responsibility as an employer to provide your workers with the necessary claims forms, should they become injured on the job. Specific requirements can vary from state to state, but you typically have no more than a day to provide injured employees with the necessary paperwork in addition to posting notices of employees' rights regarding workers compensation somewhere visible in the workplace (on a break-room bulletin board, for example). It's also a good idea (though not a legal requirement) for all employers to have a reliable workers compensation attorney they can turn to if needed.