How much does workers comp cost per employee?

Cost per employee depends almost entirely on the job's NCCI class code and the state. An office worker (class 8810) at $50K salary in a moderate state runs $50–$250/year; a residential roofer (class 5551) at the same salary in the same state runs $5,000–$15,000/year. Class code drives 80%+ of WC cost variance.

Is workers comp required for small businesses?

Yes. Required by law in 49 states for businesses with employees (the exact threshold varies, typically 1–5 employees). Texas is the only state that allows opting out, but Texas employers who decline WC lose the WC liability shield and become directly suable for workplace injuries. See specific state thresholds at our state hubs.

Do I need workers comp if I'm a sole proprietor with no employees?

Generally no. Most states exempt true sole proprietors with no employees and no workers paid via 1099. However, many commercial contracts and general contractors require subcontractors to carry WC regardless. Even if you're not legally required, contractually required is common.

What is an experience modification factor?

The E-Mod is the NCCI's actuarial comparison of your actual losses to expected losses for your class code, computed across the trailing three policy years. A 1.0 E-Mod is average; below 1.0 reduces your WC premium; above 1.0 increases it. E-Mod is portable across carriers. When you switch carriers, your new carrier uses the same E-Mod.

What's the difference between workers comp and disability insurance?

Workers comp covers on-the-job injuries and illnesses only. Disability insurance covers off-the-job injuries and illnesses (e.g., a back injury at home). Five states (NY, NJ, CA, RI, HI) plus PR require employers to carry separate state-disability insurance for off-the-job coverage.

Do 1099 contractors need workers comp?

Independent contractors are generally responsible for their own WC, but the line between W-2 and 1099 is heavily scrutinized by state DOLs. Many states require GCs to verify subcontractor WC certificates. And treat unverified subs as employees on audit. If you hire 1099s, get a certificate of insurance from each one.

How is workers comp premium calculated?

Premium = (Annual payroll ÷ 100) × Class rate × Experience Mod × any state-specific assessments. The class rate is set by state-level rating bureaus (NCCI in 38 states; independent bureaus in CA, NY, NJ, etc.) and is the same across all carriers in a state. Competition happens at discounts, dividends, and underwriting selection.

Can my workers comp premium go up after a single claim?

Yes, especially for small employers. Single claims that exceed the per-claim threshold (typically $5,000–$10,000) directly affect your three-year E-Mod calculation. Aggressive claim management, quick reporting, modified-duty return-to-work, regular adjuster check-ins, is the single biggest lever you control on long-run WC cost.

Workers' Compensation Insurance cost guide

How much does Workers' Compensation Insurance cost for small businesses in 2026? Benchmarks, factors, carrier pricing, and how to save.

Updated April 27, 2026

Looking for editorial recommendations on which workers' compensation insurance carrier to choose? See our workers' compensation insurance best-of ranking with per-carrier rationale and explicit disclosure of which carriers we excluded.

$45

Median monthly premium for workers' compensation insurance

Source: Insureon

$25–$416

Typical monthly range across small businesses

Source: Insureon

$300–$5,000

Typical annual cost

Source: Insureon

Carriers we review for workers' compensation insurance

Coverage overview

Workers' comp is a no-fault coverage that pays for an injured employee's medical treatment, a percentage of lost wages while unable to work, permanent disability benefits, vocational rehabilitation, and death benefits to surviving dependents, regardless of who was at fault for the injury. In exchange, employees generally give up the right to sue the employer for negligence — the "workers' comp bargain." A companion coverage called employer's liability insurance (bundled in states that allow private market WC) pays when an employee's injury triggers a lawsuit outside the WC statute (e.g., spouse loss-of-consortium claims, third-party-over actions). Typical exclusions include intentional self-inflicted injuries, injuries sustained while intoxicated or committing a crime, off-the-clock injuries outside the scope of employment, and, in most states, independent contractors (who are not employees). In the four monopolistic fund states (ND, OH, WA, WY), coverage must be purchased from the state fund and does not include employer's liability — that must be added as Stop Gap coverage on a GL policy.

Every state except Texas requires most employers to carry workers' compensation once they hit a threshold number of employees (one employee in states like California and New York; five in Alabama, Mississippi, and Missouri). Texas employers may legally opt out ("non-subscribers") but lose tort immunity. In ND, OH, WA, and WY, coverage must be bought from the state monopolistic fund; everywhere else, employers can use a private carrier, a state competitive fund, or qualified self-insurance. Sole proprietors and partners without employees are often exempt but may elect coverage.

Average cost

The median small business pays $45/month for workers' compensation insurance at standard Statutory state limits + $500K–$1M employer's liability limits. Most quotes fall between $25 and $416 per month. The spread reflects the seven factors below, with industry classification and revenue typically driving the largest swings.

Benchmark from Insureon WC cost benchmark. Quoted figures reflect bound small-business policies, not survey self-reports.

What affects your workers' compensation insurance cost

Carriers don't price workers' compensation insurance from a single number. These are the seven inputs they actually weigh, in roughly the order they move premium most.

Class code rate

Every job has an NCCI or state-specific class code, and each code has a published "manual rate" per $100 of payroll. Office workers run $0.10–$0.50 per $100 of payroll; roofers, framers, and arborists run $5–$25 per $100. The class code is the single biggest premium driver. A $5/100 class on $200K of payroll is $10,000/year for one employee.

Total payroll

WC premium is computed as (payroll ÷ 100) × class rate × experience mod. Doubling payroll roughly doubles WC premium, holding class mix constant. Payroll is linear, unlike GL which is sub-linear on revenue.

Experience modification factor (E-Mod)

After three years in business, the NCCI assigns each employer an E-Mod that compares your actual losses to expected losses for your class. A 1.0 E-Mod is average; 0.85 (better than average) cuts premium 15%; 1.20 (worse than average) adds 20%. E-Mod follows the business across carriers. A high E-Mod limits your carrier choices.

State

WC class rates are set by state, not by carrier, and they vary 3–5x across states for the same job. North Dakota, Ohio, Washington, Wyoming, and Puerto Rico operate state-fund-only ("monopolistic") systems where private carriers do not write WC at all. See state-by-state cost differences in our [state hubs](/states).

Claims history

Beyond E-Mod, individual claims trigger underwriter scrutiny. A serious lost-time injury in the past three years often pushes employers into the surplus-lines or assigned-risk market, where premiums run 30–100% above standard.

Safety program

Documented safety practices (OSHA training, written safety procedures, return-to-work program) unlock loss-control credits of 5–15% with most carriers. Drug-free-workplace credits add another 2–10% in states that offer them.

Pay-as-you-go vs deposit

Pay-as-you-go WC (premium debited from each payroll run) eliminates the year-end audit surprise and improves cash flow. It does not directly cut rate, but reduces the variance that breaks small-business budgets.

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Workers' Compensation Insurance cost by industry

Industry classification is the single biggest premium driver. Same coverage, same limits, but a different class code can mean a 4×–10× difference in what carriers charge.

Industry	Range visualization	Annual range
Personal Trainers		$300–$1,500
Accountants / Bookkeepers		$600–$2,500
Real Estate Agents / Brokers		$1,000–$3,000
Cleaners / Janitorial		$800–$3,500
Fitness / Gym Centers		$1,500–$4,500
Landscapers		$1,500–$5,000
Marketing / Advertising Agencies		$1,500–$5,000
Retail stores		$1,500–$5,000
Electricians		$2,500–$8,000
Lawyers / Law Firms		$2,500–$8,000
HVAC Contractors		$3,000–$8,500
Plumbers		$3,500–$9,000
Restaurants		$3,500–$9,000
General Contractors		$3,000–$10,000
Trucking		$10,000–$25,000
Physicians		$8,000–$30,000

Showing 16 of 25 industries with carrier-validated workers' compensation insurance cost data. View all industries →

How to lower your workers' compensation insurance cost

Quote 3+ carriers at renewal. Premium spreads of 30–50% on the same coverage are routine. The cheapest carrier rotates yearly as each one's loss ratio shifts.
Bundle into a BOP if you qualify. A business owner's policy combines GL + commercial property at typically 10–25% less than the same coverages bought separately.
Check your industry classification code. Misclassification (usually a holdover from when the business looked different) is the single most common avoidable cost. A 10-minute conversation with the underwriter can be worth thousands.
Set a reasonable deductible. Where it's offered, a $500–$2,500 deductible cuts premium 5–15% with negligible exposure for most small businesses.
Pay annually, not monthly. Most carriers charge a 5–10% installment fee on monthly billing. If cash flow allows, annual saves the spread.

Top workers' compensation insurance carriers by pricing transparency

Carriers ranked against our 6-dimension methodology, filtered to those we cover that write workers' compensation insurance.

Sub-threshold = fewer than 20 NAIC complaints in 3 years (data is too sparse to score reliably). N/A (broker) = not a carrier. See full methodology →

Our score	Positioning	Starting price	Coverage	Claims	AM Best	NAIC index	States	Quote channel
8.1	Broker comparing 8+ carriers	GL $21/mo	8.5/10	7.5/10	—	N/A (broker)	50 states	Broker portal
8.1	Broad-ladder primary carrier	GL $42/mo	9.0/10	8.0/10	A++	Sub-threshold	50 states	Direct online
7.9	Single-carrier program for SMBs	GL $68/mo	9.0/10	8.0/10	A+	Sub-threshold	50 states	Direct online
7.8	Digital-native micro-business	Cyber $4/mo	7.0/10	7.5/10	A+	Sub-threshold	50 states	Direct online
7.6	Workers comp specialist	—	8.0/10	7.5/10	A-	Sub-threshold	39 states	Direct online
7.4	Gig and event-based	GL $17/mo	6.5/10	7.0/10	A+	Sub-threshold	50 states	Direct online

About complaint index data: Values are 3-year averages from NAIC Consumer Information Source for commercial liability. Carriers with fewer than 20 complaints in the 3-year window are labeled "sub-threshold". A reliability call about data volume, not a finding about the carrier. Brokers (Category D) are structurally N/A. See our complete methodology.

Workers' Compensation Insurance cost FAQs

How much does workers comp cost per employee?
Cost per employee depends almost entirely on the job's NCCI class code and the state. An office worker (class 8810) at $50K salary in a moderate state runs $50–$250/year; a residential roofer (class 5551) at the same salary in the same state runs $5,000–$15,000/year. Class code drives 80%+ of WC cost variance.
Is workers comp required for small businesses?
Yes. Required by law in 49 states for businesses with employees (the exact threshold varies, typically 1–5 employees). Texas is the only state that allows opting out, but Texas employers who decline WC lose the WC liability shield and become directly suable for workplace injuries. See specific state thresholds at our state hubs.
Do I need workers comp if I'm a sole proprietor with no employees?
Generally no. Most states exempt true sole proprietors with no employees and no workers paid via 1099. However, many commercial contracts and general contractors require subcontractors to carry WC regardless. Even if you're not legally required, contractually required is common.
What is an experience modification factor?
The E-Mod is the NCCI's actuarial comparison of your actual losses to expected losses for your class code, computed across the trailing three policy years. A 1.0 E-Mod is average; below 1.0 reduces your WC premium; above 1.0 increases it. E-Mod is portable across carriers. When you switch carriers, your new carrier uses the same E-Mod.
What's the difference between workers comp and disability insurance?
Workers comp covers on-the-job injuries and illnesses only. Disability insurance covers off-the-job injuries and illnesses (e.g., a back injury at home). Five states (NY, NJ, CA, RI, HI) plus PR require employers to carry separate state-disability insurance for off-the-job coverage.
Do 1099 contractors need workers comp?
Independent contractors are generally responsible for their own WC, but the line between W-2 and 1099 is heavily scrutinized by state DOLs. Many states require GCs to verify subcontractor WC certificates. And treat unverified subs as employees on audit. If you hire 1099s, get a certificate of insurance from each one.
How is workers comp premium calculated?
Premium = (Annual payroll ÷ 100) × Class rate × Experience Mod × any state-specific assessments. The class rate is set by state-level rating bureaus (NCCI in 38 states; independent bureaus in CA, NY, NJ, etc.) and is the same across all carriers in a state. Competition happens at discounts, dividends, and underwriting selection.
Can my workers comp premium go up after a single claim?
Yes, especially for small employers. Single claims that exceed the per-claim threshold (typically $5,000–$10,000) directly affect your three-year E-Mod calculation. Aggressive claim management, quick reporting, modified-duty return-to-work, regular adjuster check-ins, is the single biggest lever you control on long-run WC cost.

Methodology & sources

Insureon: carrier benchmarks

Median monthly figures and typical-range bounds come from Insureon's published carrier-quote benchmarks. These are real bound-policy quotes, not survey self-reports. It's the most representative public dataset of small-business premium ranges.

Internal: BIC carrier pricing

Per-policy starting-price floors are sourced from the carriers we cover (10+ small-business insurers) at their published advertised rates. We don't average competitive intel; we report what each carrier publishes.

Industry: NAIC, III, SBA, IRS

Industry-wide context (NAIC complaint indices, III definitions, SBA guidance, IRS Publication 535 deductibility) sources every claim that isn't a price benchmark. State-specific WC rates, when shown, originate from each state's rating bureau (NCCI or independent).

Sources cited

Compare real prices

Stop guessing. Get an actual workers' compensation insurance price.

Tell us your industry, state, and size. We'll match you to the carriers most likely to quote workers' compensation insurance for your profile, with starting prices side-by-side.

Find your matches