How to Reach Financial Freedom: 12 Habits to Get You ThereCLOSEThe average cost of workers’ compensation insurance is around $45 per month.1 Depending on various factors like your business location, number of employees, and annual payroll, your premium could be higher or lower than average.
Workers’ compensation insurance is a legal requirement for businesses in most states. If an employee gets sick or injured at work or while performing work-related duties, this policy covers their medical expenses, rehabilitation costs, and lost wages.
If your business has to carry workers’ comp, here’s what you should know about workers’ compensation insurance costs, what the top companies are, how to save money on your coverage, and how to choose the best policy.
Average Cost of Workers’ Compensation Insurance
The average workers’ compensation premium is $45 per month, or roughly $540 per year, according to data compiled by Insureon.1In the table below, you can see the average cost of workers’ compensation insurance for businesses in different industries that have different workforce sizes.1
| Industry | Cost per month |
|---|---|
| Construction and contracting | $254 |
| Cleaning services | $147 |
| Food and beverage | $107 |
| Retail | $83 |
| Consulting | $37 |
| IT and technology | $34 |
Factors Influencing Cost
Workers’ compensation insurance premiums are unique to each business. Here are some of the factors that impact the cost of workers’ compensation. Which is usually more expensive than getting coverage from a private insurance company.4States with a higher risk of catastrophic events and natural disasters can have higher workers’ comp premiums.
Location
The state where your employees work affects the cost of your insurance policy. For example, the average cost of workers’ compensation in California is $62 per month, and the average premium in Florida is much cheaper at $46 per month.23 North Dakota, Ohio, Washington, and Wyoming require businesses to purchase worker’s comp from a state fund,
Which is usually more expensive than getting coverage from a private insurance company.4States with a higher risk of catastrophic events and natural disasters can have higher workers’ comp premiums.
Number of Employees
The number of employees you have on your payroll is another factor that impacts the cost of workers’ compensation insurance. In general, businesses with more employees pay higher workers’ compensation rates than businesses with a small workforce. When you have more employees, there’s a greater risk of workers’ compensation claims, which may lead to a higher premium.
For example, the average workers’ comp rate is $40 per month for businesses with two employees, but, for a business with 10 or more employees, the average rate is $116 per month.1Which is usually more expensive than getting coverage from a private insurance company.4States with a higher risk of catastrophic events and natural disasters can have higher workers’ comp premiums.
Annual Payroll
Workers’ compensation premiums are calculated based on your company’s average weekly employee wage and which state your business is located in. Your premium will be calculated as a fixed rate for every $100 of your average weekly payroll.4 As a result, companies with a higher payroll usually pay more for workers’ compensation insurance than businesses with a lower payroll.
Type of Work
Commercial business insurance companies use National Council on Compensation Insurance (NCCI) class codes to calculate your premium. These class codes correspond to the type of work your employees perform. Insurance companies use the class code to determine your level of risk and how it affects your premiums.
Industry
When you apply for a workers’ compensation policy, you’ll provide information about your business and industry. If your business is part of a riskier industry, like construction or contracting, you can expect to pay a higher premium. Businesses in IT or consulting generally pay lower rates because there’s a lower risk of employee injuries and illnesses.
Workers’ Comp Claim History
Workers’ compensation insurance companies assign your business an experience modification factor, which is based on your claim history. It’s used to determine how likely you are to file insurance claims. If you’ve filed any workers’ compensation claims in the past, you’ll likely pay higher rates for coverage.
Top Workers’ Compensation Insurance Companies
Most commercial insurance providers sell workers’ compensation policies. However, it’s a good idea to compare several insurers before choosing one. Here are some of the top workers’ compensation insurance companies.
Insureon
Insureon is an online small business insurance marketplace that is licensed in all 50 states. Insureon’s workers’ compensation insurance policies are underwritten by reputable insurers such as Nationwide and The Hartford. Insureon serves many industries, including food and beverage, cannabis, landscaping, real estate, and construction.
BiBerk Insurance Services
BiBerk, which is owned by Berkshire Hathaway, offers affordable commercial insurance to many businesses. The company claims its workers’ compensation policies cost up to 20% less than competitors. Quotes are available online which can help you compare BiBerk to other companies.
CoverWallet
CoverWallet is an online insurance broker that connects you with quotes from top-rated insurance companies. Through CoverWallet, you can purchase workers’ compensation that is underwritten by companies like Markel, Hiscox, Progressive, and Travelers. CoverWallet offers online quotes, or you can call an agent to get quotes.