Workers’ compensation insurance laws and requirements for employers vary from state to state, but private employers can generally choose whether to carry workers' compensation insurance coverage. A workers' compensation insurance policy provides lost wages and medical benefits to employees injured on the job—and death benefits for the spouse and dependents (children) of a worker who dies in a work-related accident.

Under workers’ compensation laws in many states employers who subscribe to workers’ compensation insurance receive a significant legal protection—they cannot be sued by an injured employee (or the estate of a deceased employee) unless the employer was grossly negligent (more negligent than simple, ordinary negligence).

In other words, if an employer has workers’ compensation insurance, that is usually the exclusive remedy for an injured employee (known as the exclusive remedy provision in the statute), and the insurance coverage bars an injured employee from suing the employer (known as the workers’ compensation bar).

An employer who does not purchase or subscribe to workers’ compensation insurance is known as a nonsubscriber. Workers’ compensation laws are usually located in a state’s statutes.

In Arizona, workers' compensation insurance is mandatory for employers, and they are required by law to provide this coverage for their employees. The Arizona Workers' Compensation Law stipulates that all employers must secure workers' compensation insurance from a licensed insurer unless they are approved to self-insure. This insurance provides medical benefits, lost wages, and death benefits to employees who suffer work-related injuries or illnesses. The law operates under an 'exclusive remedy' provision, meaning that for employers who comply with the requirement to carry workers' compensation insurance, injured employees are generally limited to the benefits provided by the policy and are typically barred from suing the employer for additional compensation. This system is designed to protect both employees, by ensuring they receive prompt and fair compensation for workplace injuries, and employers, by limiting their liability. Employers who fail to provide workers' compensation insurance (nonsubscribers) may face severe penalties and are exposed to the risk of being sued by injured employees without the limitations normally provided by the workers' compensation system.