How Much Does It Cost to Get Worker’s Compensation Insurance?

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How Much Does It Cost to Get Worker’s Compensation Insurance?

Workers’ compensation insurance covers medical care lost wages and other benefits that an employee will get if they get hurt or sick in the course of their jobs.

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How Much Does It Cost to Get Worker’s Compensation Insurance?

All states have specific sets of rules on workers’ compensation insurance. The cost of a policy will depend on the location of your employees. Companies having lots of employees and greater risks will pay higher rates for workers’ compensation coverage because workers here are more likely to face industry injuries.

How Much Is Workers’ Compensation Insurance

The cost of workers’ compensation insurance is an average of $45 per month. This cost is just the median cost of workers’ compensation insurance. Most small businesses in companies like Insureon pays less than $35 per month for this policy.

Few factors affect your worker’s compensation, which are;

  • Payroll
  • Location
  • Industry and risk factors
  • Coverage limits
  • Claims history
  • Number of employees

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Factors Affecting Workers Comp Insurance Costs

The major factors affecting the worker’s compensation insurance include;

Industry of the Business

Businesses like construction are much riskier for claims. Therefore, they attract higher premiums.

Annual Payroll of your Company

The annual payroll of a company is used to calculate its annual worker’s compensation insurance cost. Because of this, you’ll need to know the accurate figures of your annual payroll when shopping for workers’ compensation insurance programs.

Claims history

If your business has had various workers’ compensation claims in the past, there will be an increase in your worker’s compensation costs. Factors that will also be considered are the number of claims and the seriousness of the claims.

State laws

Your company’s location has a tremendous impact on premiums. Each state has its laws that guide workers’ compensation and these laws have their impact on insurance premiums.

Employee Job Classifications

A lot of states set workers’ compensation rates based on guidance from the National Council on Compensation Insurance (NCCI).

This body maintains over 700 class codes for workers’ compensation. These codes are a perfect description of a job type’s level of risk and also help to determine how much a business will pay for workers’ compensation insurance.

Looking for an NCCI code list? You can purchase a copy of the Scopes Manual by visiting the NCCI online catalog.

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Workers Compensation Insurance Coverage

The coverage of workers’ compensation Insurance includes;

  • Medical expenses of employees such as hospital stays, X-rays, and surgeries
  • Physical therapy during the need for ongoing treatment
  • Lost wages when an employee requires to take some time away from the job to recover from a work-related injury or illness
  • The cost of a funeral in case an employee dies.

Where Can I Get Workers Compensation Insurance?

The location where you can buy workers comp insurance is dependent on your state laws. There are two main choices of insurance programs to choose from, private insurance companies and state-funded workers’ compensation insurance programs.

Some states give businesses choices of buying workers comp insurance from private insurance companies or state-funded programs. Other states choose to shut out all competition and offer workers’ compensation insurance through some state-funded programs.

Workers’ Compensation Insurance Cost Calculator

Whether you are budgeting for the upcoming year or you are preparing information for tax season, some small business expenses can remain relatively consistent.

Expenses like monthly electric bills, annual software subscriptions, tools and supplies needed for operation, and so on. When it comes to workers’ compensation insurance and small business policies, it can be very tricky to do estimations.

The good news is that there are online calculators built for this very purpose, a good example of these is one grated by

How to Estimate Workers’ Compensation Cost

Estimating workers’ compensation costs will require the use of a formula. If you do not want to do this estimation with a calculator, use the formula given below;

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Workers’ Compensation Insurance Cost Calculator

To successfully estimate the compensation premium of your workers, you must divide the total payroll by 100, then multiply the result by your workers’ compensation insurance rate. A mathematical expression is given below.

(Annual Employee Payroll / 100) x Workers’ Compensation Insurance Rate = Estimated Workers’ Compensation Cost.

Common Workers Compensation Claims

About 30% of workers’ compensation cases are a result of sprains and strains, mostly from heavy lifting, according to The Hartford. These injuries usually take about 12 days before an employee can return to work.

For instance, employees in charge of moving freight and stock and nursing assistants can experience strains and sprains.

Another high cause of workers’ compensation claims is slips and falls. About 27% of workers’ compensation claims are because of these reasons, according to The Hartford.

How to Reduce Workers Comp Insurance Costs

Want to save some money on workers’ compensation insurance costs, take the tips below;

Offer Training to your Employees

One easy way to achieve this is to teach your employees how to perform simple tasks and how to prevent accidents and injuries. Teach your employees to be able to identify hazards and report them.

Perform Property upkeep Procedures

Providing your employees with a safe and healthy workplace is a very good way to reduce accidents, injuries, and illnesses. Performing routine building inspections is very important to reduce the cost of your worker’s compensation insurance. Make sure the building is up-to-date with proper building maintenance.

Giving Safety rules

Giving your employees proper education on safety within the workplace environment can certainly help prevent slips, falls, and other accidents. It’s best to devote some time to reviewing safety rules with employees.

Proper equipment

It is very important to give employees the most up-to-date personal protective equipment that they will need to stay safe on their job. This will reduce the cost of your worker’s insurance in general.

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Frequently Asked Questions

What Are the Key Factors in Calculating My Workers’ Comp Premium?

When calculating your worker’s compensation premium plan, the following factors are put into consideration;

  • The type of work done by your employees
  • Your claims history
  • Your payroll

What Is Workers’ Compensation Insurance?

Workers’ compensation insurance is a small business insurance coverage that is regulated at the state level. In most states, employers provide workers’ compensation benefits even if all they have is one full-time employee.

How Much Does Workers’ Comp Cost?

The cost of workers’ compensation varies based on several factors including the state of employment, a company’s annual total payroll, the industry, the type of work done, the insurer, and the company’s claims history. The average cost across the United States of America is $936 per employee per year, or $78 a month.

Who Is Covered by Workers’ Comp Coverage?

The workers’ compensation insurance at all companies covers employees. All non-military, federal employees are covered by the Federal Employment Compensation Act (FECA).

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