27136 Paseo Espada #103 San Juan Capistrano, CA 92675

Understanding Workers 
Compensation Insurance 

Understanding Workers Compensation Insurance Coverage

Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.

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Medical expenses
Fatal injury compensation 
Lost income

Medical expenses coverage

Risk Factors

A painter falls off a ladder while working on a ceiling and breaks a leg. His workers’ compensation policy pays for the ambulance ride to the hospital, surgery, medications, and physical rehabilitation.


When an accident happens at a workplace, workers’ compensation covers the cost of immediate care, such as an ambulance ride or an emergency room visit. It also helps pay for surgical procedures, medications, hospital stays, and ongoing care.

Compensation for fatal injuries coverage

Risk Factors

An electrician accidentally touches a live wire, goes into cardiac arrest, and dies. The electrical company’s workers’ comp policy covers the cost of the funeral and burial. It also provides financial support to the electrician’s spouse and children.


When a work-related incident is fatal, workers’ compensation pays death benefits that cover funeral expenses and help support the deceased individual’s family.

Lawsuit coverage

Risk Factors

A chef in a restaurant suffers third-degree burns while trying to put out a grease fire. She blames the restaurant for failing to provide a fire extinguisher and adequate safety training. The case goes to court; the restaurant's workers' comp policy pays for hiring a lawyer and the eventual settlement.


Workers' compensation insurance typically includes employers' liability insurance. This policy protects the employer from a lawsuit claiming a worker was injured by the employer's negligence. If an employee sues, it can help pay the attorney's fees, court costs, settlements, or judgments.

Lost income coverage

Risk Factors

An HVAC installer accidentally lowers an air-conditioner unit on his foot and breaks several bones. The installer has to stay off his feet for a month, which prevents him from working. The installation company’s workers’ comp policy pays part of the wages that would have been earned during the month of missed work.


A severe injury can prevent an employee from returning to work for days, weeks, or even months. Workers’ compensation often pays for part of the wages lost while an employee is recovering from a workplace injury or occupational illness.

Rehabilitation coverage

Risk Factors

Your disabled employee may also receive a Transferable Skills Analysis. This helps find other roles for them where they can learn new skills and work with their disability.


Workers’ comp can help cover your employee’s ongoing care. This includes ongoing physical therapy or vocational rehabilitation to help them learn new skills to return to work in a different role. Workers’ comp can even help cover any further training and certifications.

Do I need Workers' Compensation Insurance?

Yes, for the majority of American businesses. In most cases, workers' compensation insurance is mandatory. While state-specific workers' compensation rules differ, small firms are usually required to have a policy in place as soon as they recruit their first employee.

Even when not required by law, this policy offers significant defense against medical costs and employee lawsuits resulting from workplace accidents. For example, you can rely on workers' compensation if an employee suffers an injury and needs medical attention or time off or if the employee sues you for negligence in failing to prevent the accident.

Your company will be liable for any medical costs and attorney fees if you don't have workers' compensation. And the majority of states impose steep fines for noncompliance.

Why is Workers' Compensation Insurance important?

A serious workplace injury could financially devastate your business. But unfortunately, many small businesses can't afford to pay medical bills out of pocket, whether treating carpal tunnel syndrome or a broken leg.

With workers' comp coverage, you and your employees are in a better situation.

Why do certain clients require you to carry Workers' Compensation Insurance?

The expense and hassle of a workplace injury are not things that your clients want to deal with. As a result, they may demand that contractors who work for them hold workers' compensation insurance.
This requirement limits legal liability for the client. Independent contractors with business insurance are more likely to seek payment from their insurance companies (instead of the client) if they are injured while working on a project.

Want to learn more about how Work Comp works... and Explore Your Pricing and Premium Funding Options?

McDonough Insurance Services understands the workplace risks associated with Construction, Wholesale, Food Processing, Trucking, and Agri-Business.

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McDonough Insurance Services

Workers Compensation Insurance Advisors Focused on Reducing Risks and Minimizing Work Comp Costs for Construction, Wholesale, Food Processors, Trucking, Agriculture, Home Care and Cannabis
27136 Paseo Espada #103 San Juan Capistrano, CA 92675
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Mike McDonough | McDonough Insurance Services


Mike McDonough

McDonough Insurance Services


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