What is the purpose of workers' compensation insurance?

The purpose of workers' compensation insurance is to cover medical benefits and wage replacement for employees who are injured or become ill as a result of their job. This type of insurance is designed to protect both the employee and the employer; it offers financial support to injured workers while also limiting the legal liability of the employer in the event of work-related injuries.

When an employee suffers a work-related injury or illness, workers' compensation ensures that they receive medical treatment and wage replacement without the need to prove fault or negligence. This no-fault system helps facilitate quick medical attention and financial assistance, allowing employees to recover without facing the burden of extensive out-of-pocket expenses. It also serves to maintain workplace morale and productivity by providing support during the recovery process.

In contrast, the other options focus on different aspects of business and employee management that are not related to the direct purpose of workers' compensation. For instance, expanding a business or funding retirement plans involves different financial strategies and goals unrelated to the immediate needs of injured employees. Similarly, handling liability claims against employers pertains to legal issues not directly addressed by workers’ compensation, which primarily focuses on remedial care for employees after they have been harmed in the course of their employment.