Workers Compensation Insurance Rates By State In 2025!
The cost of workers compensation insurance can vary significantly from state to state. The good news is that we have included workers compensation insurance rates by state for all 50 states.
Let’s discover which states have the best workers compensation insurance costs by state and take a look at some of the most affordable and most expensive states for workers comp insurance.
Average Workers Compensation Insurance Rates By State
The average cost of workers’ compensation insurance in the United States is $1,128 per employee, per year, or $94 per month. Keep in mind that Workers’ compensation insurance costs vary widely by state due to differences in regulations, industry risks, and claims history.
Average Workers Compensation Insurance Costs Per Month by State
In 2025, the average workers compensation insurance costs
$94 per employee per month on average. States like Hawaii and Wyoming have the highest rates due to high-risk industries (e.g., agriculture, mining) and costly benefit mandates. Conversely, states like Iowa and Texas offer the lowest premiums, driven by competitive insurance markets and lower-risk sectors.
Average Workers Compensation Insurance Costs Per Year by State
In 2025, the average workers compensation insurance costs
$1,128 per employee per year on average. High-cost states such as Hawaii and Wyoming contrast sharply with affordable regions like Iowa and Texas. These disparities reflect variations in state legislation, industry hazards, and healthcare expenses. The average annual cost of workers’ compensation insurance varies by state.
Average Costs Of Workers Compensation Insurance Per Month By State
Note: These figures are estimates based on aggregated partner data and adjusted for 2025 projections. Actual premiums can vary based on factors such as business location, number of employees, claims history, and specific job duties. For the most accurate and personalized information, it’s advisable to consult directly with insurance providers or brokers.
Workers Comp Insurance made easy!
Agents Available To Assist
Get quotes and sign up online or get help from a licensed agent, we are here if you need us.
Average Workers Compensation Rate per $100 of Payroll by State
In 2025, the national average is around $1.03 per $100 of payroll. States like California and Montana have the highest rates, while Maryland and Virginia, Utah, North Carolina and Arizona have the lowest. The average workers’ compensation rate per $100 of payroll varies by state. Lets a take a look at the rates for all states.
* denotes the states that are monopolistic states (OH, ND, WA, WY). Businesses in these states must obtain coverage through the state fund.
Data Sources & Methodology: I’m basing this projection on:
Current (2023-2024) NCCI data and state-specific rate filings where available.Historical trends in rate changes.General economic forecasts (inflation, etc.).I am applying a conservative estimate of the increase. I have considered that rates in many states increase, but some decrease. I will estimate based on taking all these factors into consideration.
Factors Influencing Workers Compensation Insurance Rates
Workers’ compensation insurance rates depend on several factors. Key influences include industry risk, state regulations, claims history, payroll size, and classification codes. High-risk jobs like construction have higher rates, while states with strict laws increase costs. Businesses with frequent claims or higher payrolls also face higher premiums.
How Are Workers Compensation Rates Determined?
Workers’ compensation rates are determined by classification codes, payroll size, experience modification rate (EMR), and state regulations. Insurers assign a risk-based rate per $100 of payroll, adjust for past claims (EMR), and apply state-specific factors. High-risk industries and poor safety records lead to higher premiums.
Factors Impacting a State’s Workers Compensation Costs
A state’s workers’ compensation costs are impacted by industry mix, state regulations, medical costs, claim frequency, and litigation trends. States with high-risk industries, expensive healthcare, or frequent lawsuits have higher rates. Strict safety regulations and low claim rates help reduce costs.
Industry Risks
Industry risks in workers’ compensation refer to the likelihood of workplace injuries. High-risk industries like construction, manufacturing, and trucking have higher injury rates, leading to higher insurance costs. Low-risk sectors like office jobs and retail have lower rates due to fewer workplace hazards.
State Legislation and Regulations
State legislation and regulations impact workers’ compensation costs by setting coverage requirements, benefit levels, and insurer rules. States with stricter laws, like California and New York, have higher rates due to extensive benefits and legal complexities. Others, like Texas, allow businesses to opt out, reducing costs.
Claims History
Claims history affects workers’ compensation rates by influencing the experience modification rate (EMR). Businesses with frequent or costly claims receive a higher EMR, increasing premiums. A clean claims record lowers costs. Insurers assess past claims to predict future risk and adjust rates accordingly.
Safety Programs and Workplace Practices
Safety programs and workplace practices reduce workers’ compensation costs by preventing injuries. Effective programs include employee training, hazard assessments, and safety protocols. Businesses with strong safety records qualify for lower insurance rates due to fewer claims and a reduced experience modification rate (EMR).
Workers Compensation Costs for Small Businesses
Workers’ compensation costs for small businesses vary by industry and state. While many small businesses pay $70 to $200 per month per employee, high-risk industries like construction and carpentry often have higher rates. Low-risk sectors like real estate and accounting pay far less. Costs depend on payroll size, claims history, and state regulations.
Workers Compensation Costs Per Month for Small Businesses
Workers’ compensation costs for most small businesses average $70 to $200 per month per employee, depending on industry and state. High-risk jobs like construction have higher rates, while low-risk office roles pay less than these averages. Factors like payroll size, claims history, and state regulations influence costs.
Workers Compensation Costs Per Year for Small Businesses
Workers’ compensation costs for small businesses average $780 to $2,400 per year per employee. Costs vary by industry, state regulations, payroll size, and claims history. High-risk industries like construction pay more, while low-risk office jobs have lower premiums than these averages.
Average Small Business Insurance Costs by Policy Type
General Liability Insurance
Business Owner’s Policy (BOP)
Professional Liability (E&O)
Commercial Property Insurance
Commercial Auto Insurance
Commercial Umbrella Policy
WORKERS COMPENSATION INSURANCE WHERE YOU LIVE
Workers comp insurance by state.
Keep your business safe with a Workers Comp Insurance Policy.
Workers Compensation insurance policies protect you against lawsuits, employee injuries, cyber security attacks, and property damage. Click on your state to get a free quote today.
States with the Lowest and Highest Workers Compensation Costs
Small businesses pay an average of $70 to $200 per month per employee for workers comp insurance in the United States. When examining workers’ compensation insurance costs across the United States, it’s evident that rates and costs vary significantly from state to state. These variations are influenced by factors such as state regulations, the predominant industries within the state, and overall workplace safety records.
The Lowest Workers’ Comp Costs Per Month by State
The Highest Workers’ Comp Costs Per Month by State
Trends in Workers’ Compensation Insurance Costs by State (2020-2025)
Analyzing workers’ compensation insurance costs across states from 2020 to 2025 reveals notable trends influenced by legislative changes, economic conditions, and industry dynamics. Below is a structured overview of these costs by year:
Workers Compensation Insurance Costs by State (2020)
In 2020, workers’ compensation insurance rates varied significantly across states. For instance, Georgia’s index rate was $1.64 per $100 of payroll, meaning a business with a $100,000 payroll would pay approximately $1,640 annually for coverage.
Workers Compensation Insurance Costs by State (2021)
By 2021, the average workers’ compensation insurance cost for small businesses was about $45 per month, totaling approximately $540 annually. However, these costs varied by state. For example, states like Massachusetts and Texas had average monthly costs as low as $32, while Alabama had the highest at $119 per month.
Workers Compensation Insurance Costs by State (2022)
In 2022, the average cost for all workers’ compensation claims combined was $44,179. This figure encompasses various claim types and durations, reflecting the overall burden on the workers’ compensation system.
Workers Compensation Insurance Costs by State (2023)
Comprehensive state-by-state data for 2023 is limited. However, trends indicate that workers’ compensation costs continued to be influenced by factors such as workplace safety initiatives, economic conditions, and state-specific legislative changes.
Workers Compensation Insurance Costs by State (2024)
In 2024, significant legislative and regulatory changes impacted workers’ compensation insurance rates. The National Council on Compensation Insurance (NCCI) recommended premium rate reductions in several states, including a 6.1% decrease in Connecticut and a 9.1% decrease in West Virginia. These adjustments aimed to reduce costs for employers while expanding protections for workers.
Workers Compensation Insurance Costs by State (2025)
As of 2025, workers’ compensation insurance rates continue to vary by state and industry. Employers are encouraged to stay informed about their state’s specific rates and regulations to ensure compliance and optimal coverage.
Note: Workers’ compensation insurance costs are influenced by various factors, including state regulations, industry classifications, and individual business characteristics. For the most accurate and current information, consulting state resources or licensed insurance providers is recommended.
Average Workers Compensation Insurance Rates by Industry
Workers’ compensation insurance rates vary significantly across industries, primarily due to the inherent risks associated with different job functions. Industries with higher physical demands or hazardous environments typically face higher premiums compared to those with lower risk profiles. Below is a summary of average workers’ compensation insurance costs across various industries and professions:
Workers Compensation Insurance Rates by Industry (2025)
Transportation & Warehousing
Median Monthly Workers’ Compensation Insurance Costs by Profession (2025)
COST BY PROFESSION
MEDIAN MONTHLY PREMIUM FOR WORKERS COMP INSURANCE
Estimating and Managing Your Workers Compensation Costs
You can estimate your workers’ compensation costs by multiplying the payroll by the state’s rate per $100. Manage costs by implementing safety programs, reducing claims, and maintaining a low experience modification rate (EMR). Comparing insurance providers helps secure the best rates.
How to Estimate Your Workers Compensation Costs
To estimate your workers’ compensation premiums:
Identify your state’s projected rate per 100 of payroll (e.g., $0.80 in Texas, $1.50 in California).Multiply your total annual payroll by this rate.Example: A Texas business with a 500,000 payroll would pay:
($500,000 ÷ 100) × 0.80 = 4,000 annually.
Adjust for your experience modification rate (EMR). A business with an EMR of 0.9 pays 10% less than the base rate; an EMR of 1.1 increases costs by 10%.
*Example uses the projected rate per $100. Actual premiums may vary slightly based on insurer adjustments.
Strategies to Reduce Workers Compensation Costs
Reduce workers’ compensation costs by improving workplace safety, implementing return-to-work programs, and properly classifying employees. You can get qualify for lower premiums by minimizing claims, maintaining a low experience modification rate (EMR), and using a deductible policy. Regular safety training and ergonomic improvements also help prevent injuries and reduce claims. Lets look at a few of these more in depth:
1. Implement Safety Programs
Proactive safety measures reduce workplace injuries and claims.Regular OSHA-compliant training.Equipment maintenance and hazard audits.Businesses with strong safety records often qualify for 5–20% premium discounts.
2. Establish a Drug and Alcohol-Free Workplace
Substance abuse policies lower accident risks. Steps include:
Pre-employment and random drug testing.Employee assistance programs (EAPs).Insurers may offer discounts for certified drug-free workplaces.
3. Develop a Return-to-Work Program
Return injured employees to modified duties ASAP to:
Reduce claim duration and costs.Minimize lost productivity.Studies show these programs cut claim expenses by 30–50%.
4. Choose a Pay-As-You-Go Workers Compensation Plan
Pay premiums based on real-time payroll instead of estimates. Benefits:
Avoid large year-end adjustments.Improve cash flow for small businesses.
5. Qualify for Lower Premium Policies
Maintain a low EMR (below 1.0) by limiting claims.Bundle policies (e.g., BOP + workers’ comp) for discounts.Compare quotes from multiple insurers annually.
Calculating Workers Compensation Insurance Cost Per Employee in 2025
Use your state’s rate per $100 of payroll and employee earnings. For example:
Employee A (California): $60,000 salary × 1.50/100 = $900/year.Employee B (Ohio): $60,000 salary × 0.95/100 = $570/year.
2025 PAYROLL-BASED PREMIUM ESTIMATES
Note: Premiums rise with payroll size but are also influenced by industry risk and state rates.
What Is the Average Workers’ Compensation Insurance Cost for Most Customers?
Most small businesses pay between $70 – $200/month per employee, with an annual average of $1,128 per employee. High-risk industries like construction, often exceed $4,000/year per employee.
By combining accurate estimates, risk mitigation, and strategic insurer partnerships, businesses can control costs while maintaining robust coverage. Always consult an insurance provider for a policy tailored to your state, industry, and payroll.
Regional Variations in Workers Compensation Costs
Understanding regional differences in workers’ compensation insurance costs is critical for businesses evaluating expenses across the United States. Rates are shaped by a mix of legislative frameworks, industry landscapes, and local economic conditions. Below, we break down the key drivers behind these variations and highlight states with the most and least expensive premiums in 2025.
Overview of Regional Differences for Workers Comp Costs
Workers’ compensation costs are not uniform nationwide. States in the Northeast and West Coast typically have higher premiums due to stringent regulations, elevated healthcare costs, and higher wage thresholds for injured workers. Conversely, states in the Midwest and South often feature lower rates, driven by fewer regulatory mandates, lower medical costs, and industries with lower inherent risks.
Region with the Lowest Workers Compensation Costs
The Midwest and South consistently offers some of the most affordable workers’ compensation rates. States like Iowa, Ohio, and West Virginia benefit from:
Lower-risk industries: Agriculture, manufacturing, and energy dominate these regions.Pro-business legislation: Streamlined claims processes, caps on benefits, and Texas’s unique “opt-out” system.Competitive insurance markets: Multiple providers drive down premiums.
Texas stands out for its unique non-subscription model, allowing employers to design alternative injury benefit plans, further reducing costs.
Region with the Highest Workers Compensation Costs
The Northeast and Pacific regions face the steepest premiums. California, Connecticut, and Hawaii top the list due to:
High benefit mandates: Generous wage replacement and medical coverage.Costly litigation: Frequent disputes and legal fees inflate insurer expenses.Risky industries: Construction, logging, and healthcare increase claim frequency.
Wyoming and Alaska also rank high, reflecting hazardous industries like mining and oil extraction.
Key Drivers of Regional Disparities of Workers Comp Rates
Key drivers of regional disparities in workers’ compensation rates include state regulations, industry risk levels, medical costs, and legal environments. States with higher medical expenses or frequent litigation tend to have higher rates. Additionally, monopolistic state funds, wage levels, and experience modification factors (EMR) impact premium differences. Lets look at these a bit deeper:
State Legislation and Regulations:States like California enforce strict coverage rules, while Texas allows flexibility.”Monopolistic” states (OH, ND, WA, WY) use state-run funds. While monopolistic states often have higher rates, Ohio’s low costs stem from strict cost controls and streamlined claims.Industry Mix:Regions reliant on manufacturing or construction face higher premiums.Tech hubs (e.g., Colorado) see lower rates due to office-based risks.Healthcare Costs:States with expensive medical care (e.g., New Jersey) pass these costs to employers via premiums.Claims Culture:States with high litigation rates (e.g., Florida) experience prolonged claims, increasing insurer risk.
Actionable Insights for Employers Seeking Workers Compensation Coverage
Navigating workers’ compensation insurance requires strategic decisions tailored to your business’s unique risks and operational footprint. Below are actionable insights to optimize coverage, mitigate costs, and ensure compliance. Key considerations include:
Relocation considerations: Weigh payroll savings against operational needs.Tailored safety programs: Mitigate risks in high-cost states through OSHA-aligned training.Leverage regional networks: Partner with local insurers familiar with state-specific regulations.Monopolistic states: In Ohio, businesses must purchase coverage through the state fund but can still leverage safety programs to qualify for credits.
For businesses operating in multiple states, adopting a regionally nuanced strategy ensures compliance while optimizing costs. Always consult a licensed broker to navigate these complexities and secure competitive rates.
WORKERS COMPENSATION INSURANCE WHERE YOU LIVE
Workers comp insurance by state.
Keep your business safe with a Workers Comp Insurance Policy.
Workers Compensation insurance policies protect you against lawsuits, employee injuries, cyber security attacks, and property damage. Click on your state to get a free quote today.
Workers Compensation Rate Structures
Workers’ compensation rate structures determine how much employers pay for coverage. Rates vary based on industry risk, company claims history, and state regulations. Insurers classify businesses using NAICS or SIC codes and assign a base rate per $100 of payroll. Experience modification factors (EMR) adjust rates based on past claims. Some states use state funds, while others allow private insurers to set rates.
Are Workers Compensation Rates Set by State?
Yes, workers’ compensation rates are set by state agencies or independent rating bureaus. Some states use monopolistic state funds, while others allow private insurers to compete. Rates are based on industry classification, payroll, and claims history, with experience modification factors (EMR) adjusting final costs. Each state regulates its own system:
State agencies (e.g., California’s Division of Workers’ Compensation) approve base rates for industries.Monopolistic states (e.g., Ohio, Washington, Wyoming) require employers to purchase coverage through state-run funds, which set fixed rates.Competitive states allow private insurers to adjust rates within state-approved guidelines.Exceptions: Texas lets employers “opt out” of traditional coverage entirely, creating alternative plans.
Do Workers Compensation Rates Vary by State?
Yes, workers’ compensation rates vary by state due to differences in regulations, industry risks, and insurance markets. States set base rates per industry classification, and some operate monopolistic state funds, while others allow private insurers. Experience modification factors (EMR) also influence final premiums.
Industry Risk: High-risk sectors (e.g., construction) cost more in states like Hawaii than in Iowa due to differing hazard levels.State Regulations: California mandates higher benefits than Texas.Monopolistic vs. Competitive Markets: Ohio uses a state fund, while Florida relies on private insurers.Claims Culture: States with frequent lawsuits (e.g., New York) often have higher premiums.
Example: A construction business in Hawaii pays $1.05 per 100 of payroll, while the same business in Iowa pays $1.05—but Iowa’s lower benefit mandates and litigation risks make overall premiums cheaper.
Workers Compensation Laws and Regulations
Workers’ compensation laws and regulations vary by state but generally require employers to provide benefits for work-related injuries. These laws mandate medical coverage, wage replacement, and rehabilitation support. Regulations define employer responsibilities, claim procedures, and dispute resolution processes. Some states operate monopolistic funds, while others allow private insurers. Federal laws cover specific industries, such as maritime and railroad workers.
Workers Compensation Laws in Your State
Workers’ compensation laws are primarily governed at the state level, resulting in significant variations across the United States. Each state establishes its own regulations regarding coverage requirements, benefit levels, and administrative procedures. Key aspects that are common amongst most states include:
Coverage: Employers must provide benefits for medical care, lost wages (typically 66–80% of average weekly wages), and disability/rehabilitation.State Funds: Monopolistic states (e.g., Ohio, Washington, Wyoming) require coverage through state-run programs.Private Insurers: Most states (e.g., Texas, Florida) let employers choose private carriers.Federal Laws: Apply to maritime workers (Longshore Act), railroad employees (FELA), and federal employees.Penalties: Non-compliance can result in fines, lawsuits, or criminal charges.
For example, in California, employers must cover all injuries “arising out of employment,” while Texas allows non-subscription (alternative plans).
To navigate these complexities, it’s essential to consult your state’s specific workers’ compensation statutes or seek legal counsel familiar with local regulations.
Is There a Workers Compensation Wage Cap by State?
Yes, many states impose a cap on the wage replacement benefits that an injured worker can receive, typically calculated as a percentage of the worker’s average weekly wage (AWW), subject to minimum and maximum limits. These caps ensure uniformity and financial sustainability within the workers’ compensation system. For example:
California: Offers wage replacement at two-thirds of the employee’s AWW, up to a state-determined maximum that is updated annually.Florida: Provides benefits at 66 2/3% of the AWW, with weekly benefits capped at a maximum amount set by the state each year.
The states currently with the highest and lowest wage caps are:
High-Cap States:California: $1,619/weekHawaii: $1,546/week.Low-Cap States:Mississippi: $711/week.Arkansas: $1,028/week.Federal: The Longshore Act caps benefits at $1,639/week in 2025.
Note: Wage caps adjust annually for inflation in many states and are subject to change based on legislative updates annually. Always verify your state’s current limit.
Understanding your state’s specific workers’ compensation laws and wage caps is crucial for both employers and employees to ensure compliance and adequate coverage in the event of a work-related injury.
Using a Workers Compensation Insurance Costs by State Calculator
A Workers’ Compensation Insurance Costs by State Calculator helps employers estimate coverage expenses based on location, industry, and payroll. Users input factors like employee classification codes, payroll size, and claims history. The calculator applies state-specific base rates and experience modification factors (EMR) to determine premiums. States with competitive markets may show varying rates between insurers.
Secure Your Workers’ Compensation Coverage for 2025
Workers’ compensation costs vary widely by state, industry, and business size, but understanding these variables is the first step to managing expenses. Whether you’re a small business owner in low-cost Iowa or navigating high premiums in Hawaii, proactive strategies like safety programs and regional partnerships can significantly reduce your risks and costs. Don’t leave your business exposed—act today to secure compliant, cost-effective coverage.
Workers Comp Insurance Costs FAQs
How Much Is Workers Compensation Insurance in the US?
Workers’ compensation costs on average $94 per employee per month or $1,128 annually nationwide in 2025. However, rates vary significantly by state and industry.
Do Employers Have to Pay for Workers Compensation?
Yes, most states require employers to carry workers’ compensation insurance if they have one or more employees. Exceptions include Texas, where businesses can “opt out” of state-mandated coverage. Penalties for non-compliance include fines, lawsuits, or criminal charges.
In Which States Do Employers Pay For Workers Compensation Insurance?
Employers must pay for workers’ compensation insurance in all U.S. states except Texas, where coverage is optional. North Dakota, Ohio, Washington, and Wyoming require coverage through state-run monopolistic funds. Other states allow private insurers or state-run options. Coverage requirements and costs vary by state.
Does Workers Compensation Pay 100% of Wages?
No. Workers’ comp typically replaces 66–80% of an employee’s average weekly wage, up to a state-specific cap.
Can Businesses Reduce Workers’ Compensation Costs?
Yes, businesses can reduce workers’ compensation costs by implementing safety programs, minimizing workplace injuries, and managing claims effectively. Lowering experience modification rates (EMR) through a strong safety record can decrease premiums. Employers can also classify employees correctly, review insurer options, and consider higher deductibles to lower costs.
Which State Has the Highest (and Lowest) Workers’ Comp Rates?
Hawaii and Wyoming have the highest workers compensation rates driven by high-risk industries and costly regulations. While Iowa and Texas have the lowest rates due to competitive markets and lower-risk sectors.
