Workers Compensation
Definition. Workers Compensation (WC) is a state-mandated insurance that pays medical bills and lost wages when employees are injured on the job. Required in 49 states for any W-2 employee at the state's threshold (Texas is the only opt-in state).
Also known as: WC, Workers' Comp, Workman's Comp, Workers Comp Insurance
WC is a no-fault system: employees waive the right to sue the employer in exchange for guaranteed medical + wage-replacement benefits. Premium is calculated as (Payroll ÷ 100) × NCCI Class Rate × Experience Modifier. 4 states (Ohio, North Dakota, Washington, Wyoming) are monopolistic — you can ONLY buy WC from the state fund.
Example
A plumber's apprentice burns their hand on a torch. WC pays the ER visit, follow-up treatment, and 2/3 of lost wages while they recover.
Sources cited
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📘 Educational content only.
Reviewed by California-licensed Property & Casualty insurance agent
Jason Wootton (CA License #0I94454). Not insurance advice, an individual recommendation, or a solicitation in any state. Insurance regulations vary by state. For specific coverage decisions, consult a licensed insurance agent in your state.
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