What type of insurance is workers compensation insurance?

Workers' compensation insurance is primarily designed to cover statutory benefits that are mandated by law for employees who are injured or become ill as a result of their work. This type of insurance provides wage replacement and medical benefits to employees injured in the course of employment, regardless of who was at fault for the injury. The coverage is a statutory requirement in most jurisdictions, meaning that employers are legally obligated to provide this insurance to safeguard their employees and facilitate a swift recovery and return to work.

By ensuring that employees receive medical treatment and compensation for lost wages, workers' compensation serves as a critical safety net that protects both employees and employers. For employees, it alleviates the financial burden associated with workplace injuries. For employers, it reduces the risk of lawsuits related to workplace injuries, as employees generally waive the right to sue in exchange for guaranteed benefits under this program.

The distinction of workers' compensation as a statutory benefit also sets it apart from other forms of insurance that may not have legal requirements or serve different purposes, such as covering property damage or broader types of injuries unrelated to employment.