What's workers' compensation insurance?

Workers’ compensation insurance is a type of insurance that employers can and usually have to purchase by law and carry.  Failure to carry workers’ compensation insurance can subject employers to severe penalties.  

The purpose of workers’ compensation insurance is to pay injured workers’ the benefits they are entitled to under the workers’ compensation laws of the jurisdiction that applies (usually state law). 

The payments are typically handled by the workers’ compensation insurance company (or a company hired by the insurance company to administer workers’ compensation claims).