Under California law, every employer must have a valid workers compensation insurance coverage regardless of the number of employees he/she employs and regardless of whether the workers are considered employees or independent contractors. Failure to have a workers compensation insurance is a criminal violation in California, punishable by imprisonment up to one year and fines in excess of $10,000. 

If you are an employer, there is simply no good reason to not have a workers compensation coverage. Out of all, the greatest value of such coverage for an employer is the fact that workers compensation insurance preempts civil action for injuries sustained at work that are reasonable expected to be suffered at a given workplace. In other words, if your employee is injured, she cannot sue you individually or your business for those injuries, and she must proceed through your workers compensation insurance claim process. This virtually insulates you from potentially great financial liability for your employee's work related injuries. Surely, like with car insurance and homeowners insurance, your workers compensation premiums will be increased after a claim is filed, but it will likely be a much lighter financial burden than having to settle a civil injury case with your employee and having to pay the award out of your pocket or the pocket of your company. 

Workers compensation insurance also helps employees recover money for their injuries, since it's a no-fault system. That is, an employee doesn't have to prove anyone's fault in proving his injuries and damages, and the mere fact of sustaining a work-related injury is sufficient to obtain compensation under the policy.

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