Workers’ compensation insurance is required in most states and is mandatory in New Jersey. Often referred to as “workers’ comp,” this coverage represents a balanced agreement between employers and employees when it comes to work-related injuries or illnesses.

Under a workers’ compensation policy, employees give up the right to sue their employer for on-the-job injuries or occupational illnesses. In return, employers agree to provide state-mandated benefits to support employees during recovery.

To ensure these benefits can be paid, states require employers to demonstrate the financial ability to cover potential claims. In most cases, this requirement is fulfilled by purchasing workers’ compensation insurance. Because regulations vary by state, coverage requirements and rules may differ depending on where your business operates.