Workers’ compensation insurance pays for medical care, lost wages and other benefits should an employee get hurt or sick on the job. It is an important insurance coverage and one that is required of businesses in most states.
The average cost of workers’ compensation insurance is $1 per $100 in payroll, according to the National Academy of Social Insurance. Small businesses pay an average of $542 per year for workers’ comp, according to Insureon.
Next Insurance
Coverage
Tailored policies for thousands of professions
A.M. Best financial strength rating
A- (Excellent)
Tailored policies for thousands of professions
A- (Excellent)
How Much Is Workers Comp Insurance?
Workers’ compensation insurance costs an average of $45 per month, according to Insureon. That’s $542 per year.
Slightly less than a quarter (23%) of small business owners pay less than $30 for workers’ compensation insurance, 40% pay between $30 and $60 per month, and 37% pay more than $60 per month, according to Insureon.
Workers’ Compensation Insurance Costs by State
The national average cost of workers’ compensation insurance is $1 per $100 of payroll, according to the National Academy of Social Insurance.
| State | Cost per $100 of payroll in 2017 | Cost per $100 of payroll in 2018 | Cost per $100 of payroll in 2019 | Cost per $100 of payroll in 2020 | Cost per $100 of payroll in 2021 |
|---|---|---|---|---|---|
|
Alabama
|
$1.06
|
$1.01
|
$1.03
|
$0.94
|
$0.91
|
|
Alaska
|
$2.03
|
$1.92
|
$1.63
|
$1.47
|
$1.30
|
|
Arizona
|
$0.88
|
$0.84
|
$0.78
|
$0.70
|
$0.67
|
|
Arkansas
|
$0.85
|
$0.80
|
$0.70
|
$0.67
|
$0.63
|
|
$1.94
|
$1.78
|
$1.63
|
$1.36
|
$1.34
|
|
|
Colorado
|
$0.97
|
$0.93
|
$0.86
|
$0.76
|
$0.71
|
|
Connecticut
|
$1.24
|
$1.13
|
$1.09
|
$1.04
|
$1.04
|
|
Delaware
|
$1.47
|
$1.50
|
$1.29
|
$1.21
|
$1.13
|
|
$1.56
|
$1.40
|
$1.31
|
$1.17
|
$1.04
|
|
|
Georgia
|
$1.10
|
$1.08
|
$1.01
|
$0.95
|
$0.89
|
|
Hawaii
|
$1.52
|
$1.51
|
$1.55
|
$1.56
|
$1.62
|
|
Idaho
|
$1.70
|
$1.64
|
$1.59
|
$1.46
|
$1.42
|
|
$1.10
|
$1.02
|
$0.95
|
$0.86
|
$0.82
|
|
|
Indiana
|
$0.75
|
$0.70
|
$0.68
|
$0.64
|
$0.60
|
|
Iowa
|
$1.50
|
$1.35
|
$1.21
|
$1.15
|
$1.12
|
|
Kansas
|
$1.06
|
$0.98
|
$0.96
|
$0.91
|
$0.88
|
|
Kentucky
|
$0.92
|
$1.01
|
$0.94
|
$0.82
|
$0.78
|
|
$1.55
|
$1.51
|
$1.48
|
$1.30
|
$1.36
|
|
|
Maine
|
$1.40
|
$1.33
|
$1.28
|
$1.24
|
$1.19
|
|
$1.04
|
$1.01
|
$0.92
|
$0.80
|
$0.79
|
|
|
Massachusetts
|
$0.75
|
$0.73
|
$0.70
|
$0.64
|
$0.61
|
|
$0.74
|
$0.71
|
$0.66
|
$0.61
|
$0.57
|
|
|
Minnesota
|
$1.09
|
$1.02
|
$1.00
|
$0.98
|
$0.91
|
|
Mississippi
|
$1.27
|
$1.22
|
$1.19
|
$1.11
|
$1.09
|
|
Missouri
|
$1.18
|
$1.14
|
$1.12
|
$1.11
|
$1.06
|
|
Montana
|
$1.99
|
$1.85
|
$1.75
|
$1.62
|
$1.48
|
|
Nebraska
|
$1.21
|
$1.16
|
$1.09
|
$1.01
|
$0.96
|
|
Nevada
|
$0.93
|
$0.96
|
$0.94
|
$0.90
|
$0.84
|
|
New Hampshire
|
$1.06
|
$1.00
|
$0.90
|
$0.82
|
$0.76
|
|
$1.54
|
$1.51
|
$1.44
|
$1.31
|
$1.26
|
|
|
New Mexico
|
$1.40
|
$1.35
|
$1.32
|
$1.14
|
$1.08
|
|
$1.61
|
$1.55
|
$1.44
|
$1.26
|
$1.15
|
|
|
North Carolina
|
$1.28
|
$1.25
|
$1.14
|
$1.09
|
$0.96
|
|
North Dakota
|
$1.28
|
$1.25
|
$1.14
|
$1.09
|
$0.96
|
|
$0.78
|
$0.71
|
$0.70
|
$0.66
|
$0.65
|
|
|
Oklahoma
|
$1.30
|
$1.20
|
$1.10
|
$1.03
|
$0.99
|
|
Oregon
|
$1.13
|
$1.06
|
$1.02
|
$0.93
|
$0.96
|
|
Pennsylvania
|
$1.38
|
$1.38
|
$1.26
|
$1.19
|
$1.11
|
|
Rhode Island
|
$1.08
|
$1.05
|
$1.07
|
$0.99
|
$0.86
|
|
South Carolina
|
$1.72
|
$1.67
|
$1.59
|
$1.58
|
$1.41
|
|
South Dakota
|
$1.34
|
$1.19
|
$1.06
|
$1.01
|
$0.91
|
|
Tennessee
|
$0.88
|
$0.80
|
$0.75
|
$0.68
|
$0.67
|
|
Texas
|
$0.55
|
$0.55
|
$0.52
|
$0.45
|
$0.41
|
|
Utah
|
$0.84
|
$0.78
|
$0.72
|
$0.63
|
$0.63
|
|
Vermont
|
$1.71
|
$1.65
|
$1.56
|
$1.39
|
$1.31
|
|
Virginia
|
$0.76
|
$0.73
|
$0.69
|
$0.61
|
$0.56
|
|
$1.61
|
$1.49
|
$1.34
|
$1.20
|
$1.21
|
|
|
West Virginia
|
$1.52
|
$1.49
|
$1.45
|
$1.19
|
$1.09
|
|
Wisconsin
|
$1.63
|
$1.58
|
$1.49
|
$1.33
|
$1.26
|
|
Wyoming
|
$2.14
|
$2.12
|
$1.99
|
$1.83
|
$1.83
|
|
Average
|
$1.27
|
$1.21
|
$1.14
|
$1.05
|
$1
|
Factors in Workers’ Comp Insurance Rates
Key factors affecting workers’ compensation insurance premiums are your industry, payroll and claims history. Your state’s worker compensation laws will impact your workers’ compensation premium as well.
- Industry: When it comes to workers’ comp, businesses like construction are riskier for claims and thus have higher premiums.
- Payroll: A company’s annual payroll is used to calculate its annual workers’ compensation insurance cost. Because of this, you’ll need to know your annual payroll figures when shopping for workers’ compensation insurance.
- Claims history: If your business has had workers’ compensation claims in the past, you’ll see an increase in your workers’ compensation costs. Both the number of claims and the seriousness of the claims will be considered when determining the workers’ comp rate for your business.
- State laws: The location of your company has an impact on premiums. Each state has its own state laws regarding workers’ compensation and these laws impact insurance premiums.
How Does Your Industry Impact Workers’ Comp Insurance Costs?
You can expect to pay more for workers’ comp insurance if your industry has a higher likelihood of on-the-job accidents. For example, 20% of employee fatalities in the private industry occur in the construction industry, according to Insureon.
On the other hand, if your industry has a lower risk of on-the-job accidents, you’ll pay less for workers’ comp insurance. For example, accounting and finance businesses have low workers’ comp insurance costs, according to Insureon.
Here’s a look at monthly workers’ comp insurance costs by industry.
| Industry | Average monthly workers’ compensation cost |
|---|---|
|
Finance and accounting
|
$33
|
|
IT/Technology
|
$34
|
|
Insurance professionals
|
$36
|
|
Consulting
|
$37
|
|
Media and advertising
|
$42
|
|
Building design
|
$44
|
|
Professional services
|
$45
|
|
Therapy and counseling
|
$47
|
|
Real estate
|
$47
|
|
Healthcare professionals
|
$54
|
|
Photo and video
|
$58
|
|
Sports and fitness
|
$64
|
|
Personal care
|
$70
|
|
Retail
|
$83
|
|
Food and beverage
|
$107
|
|
Cleaning services
|
$147
|
|
Manufacturing
|
$150
|
|
Landscaping
|
$177
|
|
Installation professionals
|
$229
|
|
Construction and contracting
|
$254
|
Employee Job Classifications
Many states set workers’ compensation rates based on guidance from the National Council on Compensation Insurance (NCCI).
NCCI maintains more than 700 class codes for workers’ compensation. These codes describe each job type’s level of risk and help determine how much a business will pay for workers’ compensation insurance.
Looking for a NCCI code list? The complete NCCI code list is found in the Scopes Manual. You can purchase a copy of the Scopes Manual by visiting the NCCI online catalog.
How to Reduce Workers’ Comp Insurance Cost
Jason Metz
Insurance Lead Editor
Michelle Megna
Insurance Lead Editor
Les Masterson
Insurance Editor
Penny Gusner
Insurance Senior Writer
Train Your Employees
I recommend investing the time to train your employees how to properly perform their job-related tasks to help prevent accidents and injuries. For example, you want your employees to be able to identify hazards and report them.
Insurance Lead Editor
Maintain Your Business Property
You want to provide your employees with a safe and healthy workplace to reduce illnesses, accidents and injuries. I suggest you make sure your building is well maintained, keep building air ducts clean and keep routine inspections up to date.
Insurance Lead Editor
Review Safety Rules With Your Employees
Educating your staff on safety within the workplace can help prevent slips and falls and other accidents. I recommend you devote some time to reviewing safety rules with your workers.
Insurance Editor
Provide Your Workers With Proper Equipment
I would make sure you give your employees the most up-to-date personal protective equipment that they need to stay safe on the job.
Insurance Senior Writer
What Does Workers’ Compensation Insurance Cover?
Workers’ compensation insurance typically covers the following for employees who are injured or become ill due to their jobs.
Where Can I Get Workers’ Compensation Insurance?
Your state’s laws determine where you can buy workers’ comp insurance. There are two main choices: private insurance companies and state-funded workers’ compensation insurance programs.
Some states give businesses the choice of buying workers’ comp insurance from private insurance companies or from a state-funded program. Other states shut out all competition and only offer workers’ compensation insurance through state-funded programs.
How Are Workers’ Compensation Premiums Calculated?
Workers’ compensation premiums are calculated based on factors such as your industry type, number of employees, payroll and your business’s claims history.
Each factor becomes a number that is plugged into a formula to determine your workers’ compensation premiums:
- Classification rate is the dollar amount assigned to a type or class of workers, such as an accountant or electrician. Higher rates are assigned to more risky types of work.
- Experience modification factor is based on your workers’ comp claims history. Businesses with a track record of fewer (or zero) workers’ comp claims will get a lower score, which means better rates. New companies will be assigned an experience modification factor based on the industry average.
Common Workers’ Compensation Claims
Overexertion is the most common cause of work-related injuries according to a Travelers Insurance analysis of 1.2 million workers comp claims.
More than a third (34%) of workplace injuries happen to employees during their first year on the job and result in almost 7 million missed workdays a year.
Five Most Common Workplace Injuries or Illnesses
| Type of workers compensation claim | Percent of workers comp injury claims |
|---|---|
|
Overexertion
|
29%
|
|
Slips, trips and falls
|
23%
|
|
Struck by an object
|
13%
|
|
Motor vehicle accidents
|
5%
|
|
Caught in or between hazards
|
5%
|
Business Insurance Made Simple
Compare Free Quotes From Top Insurers at Simply Business. Get a Policy in Under 10 Minutes.
Workers’ Compensation Insurance Cost Frequently Asked Questions
What is the average cost of workers’ comp insurance for small businesses?
The average national cost of workers’ comp for small businesses is $45 per month, according to Insureon.
Your small business workers’ compensation insurance costs will depend on factors such as where your business is located, the number of employees, your annual payroll, workers’ comp claims history and your industry. For example, an industry that has a higher risk for injuries and illness, including landscaping and construction, will pay more for workers’ compensation insurance than an industry with a lower risk for injuries, such as accounting, IT and consulting.
Does location influence the cost of workers’ comp insurance?
Yes, where your small business is located will influence the cost of workers’ compensation insurance. Each state has its own workers’ comp laws and a rating bureau that determines the baseline workers’ comp insurance rate.
For example, the average cost for workers’ comp in California is $1.34 for every $100 in payroll compared to $0.57 for every $100 in payroll in Michigan, according to the National Academy of Social Insurance.
Do I need workers’ comp insurance?
You are required to have workers’ comp insurance in most states. Requirements vary by state. For example, businesses in California with one or more employees must have coverage. Small businesses in Tennessee with five or more employees must have coverage, and all coal mining and construction companies must have coverage.
But workers’ comp is not required in South Dakota and it’s optional in Texas, except for construction companies performing governmental work.
