Workers Compensation Insurance

As soon as you hire your first employee, you need the protection of workers' compensation insurance. Not only do many state laws require it but the financial security of your business depends on it.
What Is Workers' Compensation Insurance 
In general, workers' compensation provides protection to workers for injury or death arising by an accident out of and in the course of employment. 

How Workers' Compensation Insurance Works
Most workers' compensation insurance policies actually provide two types of coverages: 

Workers' Compensation Coverage. This type of insurance provides benefits for injured workers as required by state law regardless of who is at fault for the injury or illness. In other words, whatever benefits your state requires, your Workers' Compensation policy would provide. 
Employers' Liability Coverage. This additional coverage protects employers in case they are ever sued for damages arising from employment-related accidents or diseases. However, to collect benefits provided by employer's liability coverage, both the employee as well as anyone else not covered by workers' compensation laws (i.e., spouses and dependents) would have to prove that the employer was actually legally responsible for the employee's injury or disease.