Workers’ compensation coverage is compulsory in most states. If you live in a state that requires workers’ compensation insurance, you risk fines, felony charges, or even jail time for not having coverage, depending on the severity of the offense and the state law itself. If you live in a state where workers’ compensation insurance is elective, then not having coverage opens up your small business to risks.
Workers’ compensation laws are no-fault, which means that the employer agrees to pay regardless of fault. Likewise, employees cannot sue their employers for additional benefits than what’s already provided according to workers’ compensation insurance laws.