Workers' Compensation Insurance Cost (2026)

Most employers pay somewhere between $0.15 and $9.00 per $100 of payroll, depending almost entirely on the work being done. A clerical payroll of $500,000 commonly costs $1,000 to $2,300 a year, the same payroll in a restaurant runs roughly $4,500 to $11,500, and in general construction it can exceed $45,000. These are approximate national ranges, not quotes; your carrier prices your policy from your exact class codes, payroll, state, and claims history.

The core formula is (payroll / 100) x class code rate x experience modifier, then carrier credits, debits, and a policy expense constant are applied. Payroll is gross wages including overtime at straight time in most states, plus bonuses and commissions. Each job classification carries its own rate, so a business with office staff and field crews has multiple rates on one policy.

On a relative premium-rate basis, New Jersey, Hawaii, California, Alaska, and New York consistently rank among the most expensive, while Indiana, West Virginia, Arkansas, Utah, and Michigan rank among the least expensive. The spread between the highest and lowest states is roughly two to one for the same work, driven by benefit levels, medical fee schedules, and litigation rates.

Once your premium is large enough to qualify, your rating bureau compares your claims history to others in your class and issues an experience modifier. A 0.75 mod reduces manual premium by 25 percent and a 1.35 mod increases it by 35 percent. Claim frequency moves the mod more than severity, so several small reported claims usually cost more than one large one.

Nearly every state requires it once you have employees, though thresholds vary by employee count, entity type, and industry, and some states exempt certain agricultural or domestic workers. Texas is the notable exception: employers there may opt out, but must notify employees and the state and give up key liability protections. North Dakota, Ohio, Washington, and Wyoming require coverage through a state fund rather than a private carrier.

Audit your class codes for misclassified payroll, split clerical and field payroll correctly, report claims quickly and manage return-to-work so open claims close sooner, document a written safety program to earn scheduled credits, and shop the policy through an independent agent who can approach multiple carriers. Pay-as-you-go payroll reporting also reduces audit surprises but does not reduce the underlying rate.

No. Everything on this page is an educational estimate built from published state rate and loss-cost filings and relative state cost indexes. It is not an NCCI class code rate, not a filed carrier rate, and not a binding quote. Only a licensed agent or carrier can quote your policy.