Workers' Compensation Insurance is required by law in most states when you have W2 employees. In some states the requirement may include that you cover your 1099 contractors too. Part “A” of a Workers’ Compensation policy is typically called Workers' Compensation and provides benefits as set by your state legislature for your employee's medical, disability and death expenses related to work-related illness and on-the-job injuries. In some states, owners, officers, partners and other principals can decline to participate in their own company’s workers’ compensation coverage by filing an exception or exclusion form with their state.
Part “B” of a Workers' Compensation policy provides Employers Liability coverage which protects your company should an employee claim that his or her injury or illness was caused by your company’s negligence or failure to provide a safe workplace. The basic limit for Employer’s Liability coverage is often $ 100,000 per accident for bodily injury by accident; $500,000 policy limit by disease; and $100,000 per employee for bodily injury by disease.