In most states, employers are required to purchase insurance for their employees from a workers' compensation insurance company -- also called an insurance carrier.
However, in some states, smaller companies (with fewer than five employees) are not required to carry workers' compensation insurance. In some states, larger employers who are clearly solvent are allowed to self-insure, or act as their own insurance companies.
When a worker is injured, his or her claim is filed with the insurance company -- or self-insuring employer -- who pays medical and disability benefits according to a state-approved formula.
Are all on-the-job injuries covered by workers' compensation?
Most are. The workers' compensation system is designed to provide benefits to injured workers, even if an injury is caused by the employer's or employee's carelessness. But there are some limits.
Generally, injuries that happen because an employee is intoxicated or using illegal drugs are not covered by workers' compensation.
Coverage may also be denied in situations involving: