This coverage is used to comply with the Workers' Compensation coverage required by your state law. Under this requirement, an employee can be compensated if he or she is injured while working for you, regardless of your negligence as an employer.

Workers compensation is a schedule of benefits payable to an employee for injury, disability, dismemberment, or death as a result of occupational hazard. The benefits payments are the liability of the employer and workers compensation is a form of insurance that agrees to pay on behalf of the employer those injury benefits required by law.

Employer's Liability coverage, which is usually included in Workers Compensation policies, responds when an employer is held liable for the injury or illness of an employee but the claim is not covered by workers compensation portion of the policy.

In almost every state, workers’ compensation insurance is required for companies that have W2 employees.