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?
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 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’ 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 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 |
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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.
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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.
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.
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 |
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
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.
1 / 5
Use anyone except Employers. Period. They are non-transparent and shameful. After I complained long enough to warrant a call from a supervisor, the supervisor called back from a PRIVATE NUMBER (no caller ID), left a message that they are not reversing their decision (without any communication with me), and failed to leave a phone number for me to call back. She was hiding! They also fact find via email and phone calls, which is terrific for speed and communication. However, after setting a precedence of email or phone calls, they send time sensitive information via email, without any heads up... they are hoping you miss it and forfeit via expiration. Evil policies. Go elsewhere.
1 / 5
This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
1 / 5
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
5 / 5
Their general liability insurance purchase process is simply the best online experience I've ever had in my life!
5 / 5
As long as they cover your line of business, you're literally covered! best rates, best coverage, best online experience, best professionals, can't be happier that I chose them!
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