How Much is Workers Comp Insurance? Cost & Quotes From $11

When a worker suffers a bodily injury or illness, workers’ compensation insurance kicks in to pay for things like medical bills and lost wages. This type of insurance is mandated by law in virtually every US state, except for sole proprietors with no employees or self-employed individuals

The US Department of Labor sets out requirements that determine what these insurance policies should cover. They also have several programs that are aimed at preventing work-related injuries and illnesses through proper training. If you are a business owner you might ask how much is workers comp insurance? The answer to that some policies can start as low as $12 per month. Of course, the pricing of workers’ comp can be more expensive for some businesses.

In this article, we will break down common questions and concerns that many have about workers’ compensation insurance. These include:

  • Cost of workers comp per employee

  • Workers comp rates by state

  • Workers compensation rates by class code

  • Factors that affect the cost of workers compensation insurance

  • What is a workers’ comp cost calculator?

  • What types of benefits are covered by workers’ compensation insurance?

  • What is a monopolistic state?

  • What is a workers’ comp ghost insurance policy?

How Much Does Workers Comp Cost Per Employee?

So you want to know how much is workers comp insurance for one employee? On average, workers’ comp costs $377 per employee to employers nationwide. This represents less than 1% of total payroll expenses on average. It is easy to find affordable workers comp coverage by looking at our guide for best workers comp insurance companies of 2023

When someone is trying to figure out “how much does workmans comp cost?” they will come to find that the average cost of $377 per employee might be different from their own experience. This is okay, the situation of every employer and employee is unique. 

How Much Does Workers Comp Cost For Small Business?

How much does workmans comp cost for small businesses? That answers varies depending on the number of employees and how risky the jobs they do are.

Small business workers comp insurance cost will typically be less because they will have fewer active employees driving up payroll costs. Small businesses typically spend between a few hundred to a few thousands dollars every year on workers’s comp.

However, everyone’s situation is different, so be sure to do your research so you can pick the best policy. The answer to anyone asking “how much is workmans comp?” will always depend on their personal situation and the unique risks of their business. 

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Workers Comp Rates by State

Workers’ compensation rates will vary by state. The reason these rates vary by the state is that each has a unique claims history with different industries and its own economies. They use an index rate, which tells you the cost per $100 in payroll. A rate of 2.44 would mean that a business with $100,000 in payroll spends $2,440 yearly on workers’ comp premiums.

How much is workers compensation insurance? To answer this adequately, we must examine the cost of workers’ compensation insurance in all 50 states.

State Index Rate
New Jersey 2.44
Hawaii 2.27
California 2.26
New York 2.15
Lousiana 2.13
Vermont 1.98
Wyoming 1.86
Wisconsin 1.67
Maine 1.67
Connecticut 1.64
Rhode Island 1.62
Minnesota 1.55
Missouri 1.54
Iowa 1.52
Montana 1.46
Idaho 1.43
Oklahoma 1.41
New Hampshire 1.39
Illinois 1.39
Alabama 1.38
Alaska 1.37
South Carolina 1.35
Delaware 1.34
Washington 1.31
South Dakota 1.30
Pennsylvania 1.27
New Mexico 1.27
Florida 1.26
Nebraska 1.25
North Carolina 1.16
Georgia 1.15
Massachusetts 1.05
Maryland 1.04
Tennessee 1.03
Kansas 1.02
Virginia 1.01
Nevada 1.00
Michigan 1.00
Mississippi 0.98
Colorado 0.93
Oregon 0.93
Texas 0.88
Arizona 0.87
Utah 0.86
Kentucky 0.83
Ohio 0.77
Indiana 0.86
Arkansas 0.65
West Virginia 0.63
North Dakota 0.58

Workers Compensation Rates by Class Code

Workers compensation insurance quotes will be significantly affected by an industry’s class code. That said, another way to figure out how much is workers comp insurance for one employee is to use the class code rates imposed in the state where you’re doing business. 

As an example, we will use some of the notable class codes of North Carolina to illustrate how the rate varies. There are nearly 800 unique class codes developed by the National Council on Compensation Insurance. It would take too much time to explain them all, as each state has an average of 327 classes with over 1000 different descriptions.

Industry Group Code Job Description Rate
01 1438 Smelting – Electric Process & Drivers $6.48
02 0042 Landscape Gardening & Drivers $7.19
03 8748 Automobile Sales Persons $0.95
04 0008 Farm – Vegetable & Drivers $3.33
05 1005 Coal Mining $11.07
06 9403 Garbage Collection Drivers $11.93
07 6826 US ACT Marina & Drivers $7.31

A construction worker helps his colleague who was injured during his work

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Factors That Affect The Cost Of Workers’ Compensation Insurance

A common question employers ask “how much does workers comp insurance cost?” It will cost an average of $45 per month or $540 per year.  The average cost of workers comp insurance is not simple to calculate. It will depend on factors such as:

  • Class code rate

  • Payroll

  • Experience Modifier

  • State Area History

  • Insurance Carrier Factors

If you are curious about how these influence workers compensation insurance cost, it is usually through these variables being weighted differently.  If you want to get cheap workers comp insurance, you will want to reduce how your business handles these. How the five factors affect workers’ compensation costs is outlined below.

Factor How It Affects Workers’ Compensation Cost
Class code rate This is an industry work classification that determines the risk level of the jobs in your industry. Riskier jobs increase the variable leading to higher workers’ comp costs
Payroll The higher your payroll, the higher your workers compensation insurance premium. This is because you have greater exposure to loss, making you a riskier company for the insurance company
Experience modifier This is your history with previous claims. All new businesses start with a 1.0 variable, but that number will rise the more claims you have. In essence, more claims = higher premiums
State area history Specific work class rates will fluctuate between states based on the area’s history. For example, firefighters have
Insurance carrier factors Insurance companies will often have industries they are more experienced in. These are translated into carrier rates that vary from company to company. If an insurance company isn’t as experienced in an industry, the rates for those policies will go up because they don’t want to absorb as much risk

Get a better idea of the average workers compensation insurance cost by comparing quotes. Start by clicking on the “Get Quotes” button on this page. 

Compare Cheap Workers Comp Insurance Quotes Online

Get all the best quotes from leading providers in a click of a button!

How to Get Affordable Workers Comp Insurance?

You can enjoy affordable workers comp insurance by getting it as a pay-as-you-go policy. A pay-as-you-go workers comp takes your actual monthly payroll rather than the estimate annual payroll when determining premiums. 

What is a Workers’ Comp Cost Calculator?

How much does workers compensation insurance cost? When calculating workers comp rates, you will want to use a workers comp cost calculator.  A workers’ comp cost calculator works by filling out individual information for each employee. You will fill out details like annual payroll and class code. The calculator will then automatically spit out an estimated workers compensation rate that you might pay.

Insurance companies will use a similar process when deciding workers’ compensation insurance quotes. They will often use a formula that applies class code rates, an experience modifier, and the payroll cost. We have a guide for that helps the reader find affordable workers compensation insurance quotes.

What Types of Benefits Are Covered by Workers’ Compensation Insurance?

Now that you know how much does workers compensation insurance cost, let’s take a quick look at the types of benefits covered. Medical benefits and lost wages are typically covered by worker’s compensation insurance.  Below is a chart that breaks down what activities are covered under what category.

Medical Benefits Lost Wages
Doctor Visits, Hospital Stays, Surgery, Medications, Physical Therapy, Traveling Expenses, Medical Tests Part of lost wages paid as disability income benefits

What is a Monopolistic State?

A monopolistic state is any state that requires all worker’s compensation insurance to be handled by the state government. Because of this, the workers comp insurance price is more consistent across industries. In these states, you cannot purchase workers’ comp from a private insurer. The states that are monopolistic include:

  • Ohio–Ohio’s workers’ compensation is handled by the Bureau of Workers’ Compensation. The BWC pays any lost wages or medical costs that employees incur on the job. The claims process is categorized into medical-only or lost time. If a worker has missed less than seven days, it is medical-only. Lost time covers conditions that caused them to miss longer times at work. Workers’ compensation insurance costs are determined by the same factors, such as payroll size, the riskiness of the job, and claim history

  • Wyoming–The Wyoming Department of Workforce Services oversees the workers’ compensation process in the state of Wyoming. It also enforces all the labor labors that were created to protect Wyoming workers and ensures that they have safe places to work

  • Washington–The state of Washington uses the State Department of Labor & Industries to deal with claim filings for workers’ compensation. They offer partial wage replacement for workers who become unable to work due to injuries as well as approved medical services. They also take an extra step in coordinating these medical services to ensure the worker is getting properly treated

  • North Dakota–In North Dakota, the workers comp system is run by the Workforce Safety & Insurance division of the government. Their website acts as a resource for both employees and employers, providing a place to file claims. They also have medical provider resources that can help employers treat their injured employees

What is a Workers’ Comp Ghost Insurance Policy?

A worker’s comp ghost insurance policy is an insurance policy that offers no actual coverage. It is sometimes used by independent contractors that are required to satisfy state legal requirements or client requests to have workers comp insurance. 

Typically, self-employed contractors who do not have any employees are exempt from the legal requirement to have workers’ compensation. Despite this, they may still be required to show proof of workers’ comp coverage to perform their work.

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