What Are the Factors on Which Workers' Compensation Premiums Are Based?

Since not all workers’ comp premiums are the same, calculating workers’ comp can include a few things. Several factors that can affect workers’ comp rates include: • State requirements • Number of employee • Payroll size • Claims history • Experience modification number • Coverage limits:

How Much Does Workers’ Comp Insurance Cost?

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Key Takeaways

Workers’ compensation insurance costs can vary, but many small businesses pay about $81 a month. Some policies can start as low as $13 a month.**
Jobs in industries with a higher risk of injury or illness typically see higher workers’ comp rates.
Businesses can help lower their insurance costs by improving safety standards, training employees, selecting the right deductible and bundling insurance policies.

How Much Is Workers’ Comp Insurance?

Most of our customers with less than $300,000 annually in payroll pay an average of $81 a month for workers’ compensation insurance, also known as workers’ comp insurance.**

It’s important to know that the cost of workers’ compensation insurance varies between businesses. Insurance companies look at different factors when determining premiums, so there’s no standard cost. Factors can include your:

Location
Payroll accessed through an audit
Industry
Claims history
Type of work

Most states require businesses to have workers’ compensation insurance if they have employees. Are you wondering, “What does workers’ comp cover?” It helps employees recover from serious work-related injuries or illnesses. The benefits they receive are not taxable at the federal or state level.

What Is the Average Workers’ Compensation Insurance Cost for The Hartford’s Customers?

On average, small businesses insured by The Hartford pay $1,032 per year, or $86 a month, for workers’ compensation coverage.** Since insurance companies use various factors to determine workers’ compensation costs, there isn’t one set rate for small business customers. The price each business pays depends on many variables, starting with the type of industry it’s in.

Check out our quiz if you’re interested in learning how to calculate the workers’ compensation insurance cost for your business.

Who Pays the Premiums for Workers’ Compensation Insurance?

Employers pay for workers’ compensation insurance. You can get this coverage through a state-run program or a private insurance company. If your business is in North Dakota, Ohio, Wyoming or Washington, you’ll have to get workers’ comp insurance through a monopolistic state fund.

Which Factors Determine Workers’ Compensation Premiums?

Several factors can affect the way an insurance company calculates workers’ comp rates, including:

State requirements
Number of employees
Payroll size
Claims history
Experience modification number
Coverage limits
Job duties

State Requirements

Workers’ compensation laws vary by state. Most states require businesses with at least one employee to have workers’ compensation insurance, but there are exceptions. For example, in Arkansas, small business owners with less than three employees don’t need coverage.

Why States Differ

Workers’ compensation insurance rates are regulated completely at the state level. Each state’s rates are set based on the laws, procedures and benefits specific to each jurisdiction. For example, your state’s workers’ comp laws determine which businesses need insurance and how much coverage they must carry. Each state may also have a medical fee schedule that details costs for workers’ comp treatments. If the medical costs are higher, it can increase the workers’ comp rate in that state.

How you get workers’ comp insurance can also affect rates. Being able to shop around for quotes means you can get coverage at the right price for your business.

You can find your state’s average cost of workers’ compensation premium in this table:

Rates by State

State	Average Issued Premium**
AL	$1,448
AR	$998
AZ	$1,116
CA	$1,600
CO	$759
CT	$1,555
DC	$1,081
DE	$976
FL	$1,149
GA	$1,041
IA	$505
ID	$1,211
IL	$1,062
IN	$862
KS	$946
KY	$837
LA	$1,069
MA	$990
MD	$839
ME	$1,220
MI	$740
MN	$1,181
MO	$1,428
MS	$1,435
MT	$1,033
NC	$1,009
NE	$809
NH	$1,149
NJ	$1,079
NM	$1,423
NV	$906
NY	$998
OK	$1,150
OR	$1,166
PA	$935
RI	$1,721
SC	$1,234
SD	$703
TN	$1,109
TX	$576
UT	$666
VA	$840
VT	$1,300
WI	$1,173
WV	$557

It’s a good idea to work with a business insurance specialist to ensure you understand your local laws and are compliant.

The Number of Employees and Payroll

The bigger your staff, the more it’ll cost for workers’ comp coverage. That’s because your business’ payroll is part of the premium (annual cost) calculation for workers’ compensation insurance. Your cost is calculated per $100 of payroll. So, if your payroll is larger, you can expect to pay a higher premium.

Industry Risks

Jobs with higher levels of risk result in higher workers’ comp costs. For example, an accountant faces a lower risk of injury than a lumberjack. Riskier work that has a greater potential for workplace injuries, illnesses or death can cost more for coverage.

Claims History

Your claims history can also impact your workers’ compensation cost. If you’ve submitted a large amount of workers’ compensation claims in the past, you’ll likely pay a higher rate. The more severe these claims are, the higher your cost will be as well.

Experience Modification Number

An experience modification number (often called an experience mod) is a rating that compares your business’ workers’ compensation claims history to other similar businesses in your industry. Insurance companies use this number to adjust your total premium up or down. A lower experience mod generally means fewer or less severe claims and can help reduce your premium. These numbers are calculated by workers’ compensation rating bureaus, and if your business is eligible, all insurance companies are required to apply them. Keep in mind that not every policy has an experience mod, since eligibility depends on your state’s requirements.

The best way to find the right coverage at the right price for your business is to get a quote from more than one insurance company. You can also work with insurance agents to get the pricing you need. From there, you can compare insurance premiums. To begin, get a quote from us today.

What Industries Have the Highest Workers’ Compensation Rates?

Generally, the riskier a job is, the more it’ll cost for workers’ compensation insurance. Some high-risk jobs include:¹

Police officers
Firefighters
Electrical contractors
Lumberjacks
Construction equipment operators
Telecommunications repair workers

Employees in these jobs typically have a higher risk of injury, which can lead to higher workers’ comp premiums.

How Do Workers’ Comp Class Codes Impact Insurance Cost?

Rating bureaus, such as the National Council on Compensation Insurance (NCCI), maintain workers’ comp class codes. The NCCI bases class codes on the types of jobs that workers do. These standardized codes are used by all insurers to calculate workers' compensation costs. Having employees in high-risk class codes can result in a higher price for workers’ compensation.

4 Ways To Save on the Cost of Workers’ Compensation Insurance

1. Train Your Employees

Training employees on proper workplace procedures can help reduce the likelihood of injuries, which could help lower your workers’ compensation insurance cost.

2. Choose the Right Limits and Deductible

Raising your deductible can help lower your insurance rate. Your deductible is the amount you pay out of pocket before your insurance company covers a claim.

3. Have Safety Standards

Prioritizing workplace safety at your business can help you identify and mitigate workplace hazards before they occur. This can help lower the amount of workers’ compensation claims you submit. You can also help bring your costs down by:

Increasing security
Incorporating fire safety, safe driving or workers’ safety programs
Removing slipping or tripping hazards
Adding equipment lock-out protocols and clear safety signage

4. Bundle Your Policies

Bundling can help you save money on insurance. For example, bundling your workers’ compensation and general liability coverages could help you save on both policies.

female small business owner knows How Much Is Workers’ Comp Insurance

Get a Workers’ Comp Quote

At The Hartford, we’re backed by more than 200 years of insurance experience. Our specialists are ready to help you get workers’ comp insurance and any other type of coverage you may need at the right price.

Get a quote today and see how we can help protect your business.

Frequently Asked Questions About Workers’ Compensation Cost

How To Calculate Workers’ Compensation Premiums

Insurance companies use several factors to calculate your workers’ compensation insurance premiums. Some factors that can affect your workers’ compensation insurance cost include your:

State requirements
Number of employees
Type of work
Payroll
Risk exposure
Industry

You can use this formula to estimate your workers’ comp cost:

Workers’ Classification Code Rate X Experience Modification Number X (Payroll/$100) = Premium***

Your classification code rate is determined by the National Council on Compensation Insurance (NCCI) or your state’s rating bureau. It’s based on the type of work your employees do. The NCCI also calculates your experience modification number based on your claims history compared to similar businesses.

What Is an Example of a Workers’ Comp Premium Calculation?

In 2026, the workers’ compensation rate for Florida landscapers was $4.144 per $100 of payroll.**² Let’s say a landscaping business has three employees who each earn $40,000 a year, and let’s assume the business is new, so it doesn’t have an experience modifier.

That means the estimated workers’ comp premium is:

$4.144 × ($120,000 ÷ $100) = $4,973

The Florida landscaping business can make one lump sum payment of $4,973 for workers’ compensation coverage for the year. Or they can make smaller payments with payroll billing, while still getting workers’ comp coverage for the year. And since payment is based on payroll, the business’ payments can change if employees get hired or leave.

Remember, this formula is only meant to give you an estimated cost. Get a quote today online or find an insurance agent to see how much your workers’ compensation costs may be.

What Is Payroll Billing Workers’ Comp Insurance?

Payroll billing workers’ comp insurance is a convenient way to make your premium payments based on your actual payroll. There’s no down payment, and you pay for your workers’ comp coverage based on your schedule for payroll in smaller amounts that are spread out over the course of the year.

With payroll billing, your employees still get benefits if they get hurt or sick from their job. Instead of paying for your workers’ comp cost in one large payment, you’ll make a smaller payment during each pay period. This means if you hire or lose employees, your workers’ comp cost may change as your payroll changes.

What Are the Benefits of Payroll Billing Workers’ Compensation Insurance?

One of the benefits of payroll billing workers’ compensation insurance is a lower upfront cost, but it also helps:

Eliminate large lump sum payments
Calculate up-to-date workers’ comp rates during each payroll cycle
Make the workers’ compensation audit process easier, saving you time and money
Improve cash flow
Ensure you’re paying an accurate premium
Distribute the cost of workers’ compensation premiums throughout the year

If you’re wondering how to get payroll billing workers’ comp insurance, you can call your insurer or your payroll provider.

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¹ USA Today, “The Most Dangerous Jobs in the U.S. Include Electricians, Firefighters and Police Officers,” viewed January 2026.

² Florida Workers’ Compensation Joint Underwriting Association Inc., “2026 Rates,” viewed January 2026.

** Costs, premiums, and coverages mentioned are estimates and are not guaranteed. Actual cost, premium, and coverage are determined at the time of quote or issue and are specific to an individual risk. Premiums are based on information provided to The Hartford, including, but not limited to, underwriting and rating criteria. All examples included on this website or in an advertisement are intended for informational purposes only and are not an offer or a guarantee of premium or coverage. Coverage and products described are subject to the terms and conditions found in the policy contract. Any educational information provided about available coverages does not modify the policy language or imply that any claim is covered. Products are not available in all states or for all businesses.

*** This is a simplified calculation for educational purposes only. Actual premium calculations can be more complex. Experience mods are subject to state requirements and do not apply to every policy.

Additional disclosures below.