If you are a business owner, one of the first questions you ask when hiring employees is how much does workers comp insurance cost. The short answer is that it varies quite a bit, but there are average figures that can help you budget. The cost of workers compensation insurance is based on several factors, so you will not find a single set price.
For most small businesses, the average workers comp insurance cost is often lower than you might expect. Insurers like The Hartford report that many of their small business customers pay about $81 per month, or roughly $1,032 annually . Other insurance providers cite median monthly costs around $76. A workers comp cost calculator can give you a rough estimate, but the final price depends on your specific business details.
What is the Average Workers Compensation Insurance Cost?
The worker compensation insurance cost can change based on the state you live in and the type of work your employees do. For a simple baseline, providers often start with a base rate of around $0.30 per $100 of payroll. This means if an employee earns $40,000 a year, the starting premium for that worker might be about $120 annually. From there, insurance companies look at your business’s risk profile to set the final premium.
When you are looking at workers compensation cost, you will often see it expressed as a rate per $100 of payroll. For example, a low-risk business might pay $0.75 per $100, while a high-risk business might pay several dollars per $100.
Here are some general examples of the average workers comp insurance cost for small businesses:
- The Hartford customers pay around 81 per month** or **$1,032 per year.
- Insureon customers pay a median of $54 per month** or **$643 per year.
- Progressive Commercial customers had a median monthly cost of $76 in 2025.
What Factors Determine Workers Comp Insurance Rates?
Insurance companies do not just pull a number out of thin air. They look at several key details to calculate how much does workers comp cost for your specific company.
1. Your Location and State Rules
Where your business operates plays a big role in the workers comp insurance rates. Every state has its own set of laws and rules for workers compensation insurance . Some states have high average rates, while others are much lower.
For instance, the 2024 index rates from the National Council on Compensation Insurance show that states like Hawaii, New Jersey, and New York had rates significantly above the national median. On the other end, states like Arkansas and North Dakota had some of the lowest index rates . If you live in a monopolistic state like North Dakota, Ohio, Washington, or Wyoming, you have to buy your policy from a state fund, which also affects the cost.
2. Your Industry and the Type of Work
This is one of the biggest influences on the workers comp insurance cost. A construction worker has a much higher chance of injury than an accountant. Therefore, a roofing company will pay significantly more for insurance than a marketing firm. Insurance companies assign class codes to different job types, and these codes have base rates that reflect the risk of injury. If you get a workers compensation insurance quote, the first thing they will ask is what your business does.
3. Your Payroll and Number of Employees
Your premium is calculated per $100 of payroll. This is because the more employees you have, and the more you pay them, the greater your total risk exposure. A larger payroll means a higher worker compensation insurance cost. For example, Insureon data shows that businesses with 3 to 5 employees pay an average of $62 per month, while businesses with 10 or more employees pay an average of $160 per month.
4. Your Claims History
Insurance companies look at your past claims to predict future risk. If you have a history of frequent or severe workplace injuries, you will likely see higher rates of workers comp insurance cost. A clean safety record can help you secure low cost workers comp insurance. This history is often reflected in your Experience Modification Number (e-mod). A number below 1.0 means your claims history is better than average, which can lower your premium.
Can I Get Instant Workers Comp Insurance or a Quote?
Yes, you can often get instant workers comp insurance or a very quick quote online from many providers. You will need to provide basic information about your business, including your payroll and the class codes for your employees. Comparing quotes from different companies is a smart way to find the right price for your needs.
For small business owners, many providers advertise workers comp insurance for small business packages that are simple and affordable. You can also bundle general liability and workers comp insurance together. This is often called a Business Owner’s Policy, and it can save you money compared to buying each policy separately.
How to Save Money on Workers Comp Insurance
There are ways to control your workers comp insurance cost. You do not have to just accept the first price you get.
- Improve Workplace Safety: Investing in safety training and equipment can reduce workplace injuries. Fewer claims mean a lower e-mod and cheaper premiums in the long run.
- Implement a Return-to-Work Program: If an employee does get hurt, having a program to bring them back to light-duty work can reduce claim costs. This can keep your premiums from rising sharply.
- Bundle Your Policies: Buying your general liability and workers comp insurance from the same company can often get you a discount.
- Get Multiple Quotes: Rates vary between insurers. Shopping around ensures you are getting the best deal on workers comp insurance rates.
Frequently Asked Questions
What is the average workers comp insurance cost for a small business?
For many small businesses, the median cost is between $54 and $81 per month . This translates to roughly $650 to $1,000 per year. However, this is just an average, and your specific cost will vary.
How is workers comp insurance calculated?
The basic formula is: (Class Code Rate x Experience Modification Number) x (Annual Payroll / $100) = Premium . The class code rate is based on the risk of the job, and the experience mod is based on your claims history.
Why does workers comp insurance cost vary so much by state?
Each state has its own regulations, laws, and medical fee schedules . Some states also have monopolistic state funds, which can change the price compared to states where private insurers compete for your business.
Can I get low cost workers comp insurance if I have previous claims?
Yes, but it will likely be more expensive. However, you can work to lower your costs by focusing on improving safety, preventing new claims, and creating a return-to-work program to reduce the severity of future claims .
What is the cost of workers compensation insurance for high-risk jobs?
High-risk jobs like construction, electrical work, and policing have some of the highest rates . They can pay several dollars per $100 of payroll. For example, a construction business might pay around $179 per month, while a finance company might pay $34 per month.
Does my number of employees affect workers comp insurance rates?
Yes. The more employees you have, the higher your total payroll is likely to be. Since the cost is calculated per $100 of payroll, a larger team generally costs more to insure.
What is an experience modification number?
It is a rating that compares your claims history to other businesses in your industry. A number of 1.0 is average. If your number is below 1.0, you have a better-than-average safety record and are eligible for discounts.
Is workers comp insurance cost for small business mandatory?
In most states, yes. If you have employees, you are generally required by law to have this coverage. The rules change based on the state, so it is essential to check your specific state requirements.
Can I get a workers compensation insurance quote online?
Yes, many providers offer free online quotes. You will need to provide your business location, payroll, and the job duties of your employees to get an estimate.
Does my workers comp insurance cost change every year?
Yes. Your policy is usually audited at the end of the term to check your actual payroll. If your payroll changed, your final workers comp insurance cost will be adjusted. Your rate might also change if your state’s regulations or your claims history changes.
