Coverage guide

Workers’ compensation insurance

For businesses with employees, and contractors whose clients demand proof: who must carry workers’ comp in key states, what it pays and what it typically costs.

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What similar businesses pay

Workers’ comp, all industries: About $54 a month
Payroll under $300,000: About $81 a month
Finance and accounting: About $34 a month

Published benchmarks, not quotes. Your price depends on underwriting.

Cost

What workers’ compensation insurance costs

About $54 a month

Workers’ comp, all industries

Insureon median for its small-business customers ($643 a year), updated April 13, 2026

About $81 a month

Payroll under $300,000

The Hartford customer average, updated May 20, 2026

About $34 a month

Finance and accounting

Insureon median by industry, updated April 13, 2026

About $179 a month

Construction and contracting

Insureon median by industry, updated April 13, 2026

Workers’ comp is priced on payroll, not on a flat fee: the insurer applies a rate per $100 of payroll for each job’s class code, then adjusts it by your experience modification. The Hartford’s example uses Florida’s 2026 landscaper rate of $4.144 per $100, which puts three employees earning $40,000 each at an estimated $4,973 a year before any experience modifier. Across Insureon’s customers, most of whom have fewer than five employees, 47% pay under $50 a month and 24% pay $50–$100, with state medians from $34 a month in Texas to $127 in Alabama. Office businesses with small payrolls sit at the low end; trades with field crews can pay many times the median.

What moves your price

Class code: each employee is rated by the work they do, so a roofer costs far more to cover than an office administrator.
Total payroll, since premium is charged per $100 of wages.
Experience modification: your past claims compared with similar businesses.
State: rates and benefit levels are set state by state.
Number of employees and whether owners include themselves on the policy.
Employer’s liability limits and any deductible you choose.

Who it’s for

Who needs workers’ compensation insurance

You have employees in a state that requires it

Most states require coverage once you hire. California requires it with even one employee; Florida requires it at one employee in construction and four elsewhere; Georgia requires it once you regularly employ three, part-time staff included.

An employee is hurt on the job

A cut, fall, back strain or repetitive injury needs treatment and time off. Workers’ comp pays medical care and part of lost wages regardless of fault, and in return the employee generally cannot sue you over the injury.

An injured worker sues anyway

A worker or family member may claim your negligence caused the injury. The employer’s liability part of most policies pays your defense and any damages, up to its limits.

A general contractor requires proof

New York’s board notes that general contractors routinely require subcontractors to show their own workers’ comp, which pushes many owners with no employees to buy a policy. In Florida, an uninsured subcontractor’s workers become the hiring contractor’s employees.

You work alone in a hazardous trade

Owner-only businesses are often exempt, but not always. California requires roofers to carry workers’ comp even with no employees, and Florida construction businesses count corporate officers and LLC members as employees unless exempted.

You operate where coverage is optional

Texas lets most private employers choose. Texas’s Division of Workers’ Compensation says coverage limits your liability if an employee sues, except when gross negligence causes a death, and employers without it must report that to the state.

Coverage

What workers’ compensation insurance covers

Medical care

Medical expenses and physical therapy for a work-related injury or occupational disease, paid regardless of who was at fault.

Lost wages

Temporary disability benefits replace a portion of wages while the employee cannot work, at amounts set by each state’s law.

Permanent disability and return to work

Benefits for lasting impairment, plus state programs such as California’s supplemental job displacement benefit and return-to-work supplement.

Death benefits

Payments to a deceased worker’s dependents and help with funeral costs.

Employer’s liability

Included in most private policies, it covers lawsuits by injured employees or their families. Federal contracts subject to FAR 28.307-2 require at least $100,000 of this coverage.

Work in other states

Employees who travel need the right states on the policy. Florida, for example, requires out-of-state employers working there to have Florida listed in Section 3A unless a reciprocity rule applies.

Stop gap in state-fund states

In Ohio, North Dakota, Washington and Wyoming the state fund does not include employer’s liability, so businesses add stop gap coverage as an endorsement to a general liability policy.

What it doesn’t cover

Injuries to customers, visitors or other third parties, which general liability covers.
Owners who are not employees by law or who have opted out, such as sole proprietors who have not elected coverage.
Genuinely independent contractors, though states test this strictly and may treat uninsured subcontractors’ workers as yours.
Harassment, discrimination and wrongful termination claims, which need employment practices liability.
Employer’s liability in monopolistic state funds, which needs stop gap coverage.
Injuries that are not work-related.

Rules

Requirements and filings

Each state writes its own workers’ comp law. These examples show how much the rules differ; check your state agency for the threshold and exemptions that apply to you.

Requirement	Applies to	What it means
California workers’ comp law	All California employers, even with one employee, and roofers with no employees	Coverage required (DWC). The Labor Commissioner can cite $1,500 per uncovered employee and issue a stop order halting work until coverage is in place.
Florida Chapter 440: construction	Construction employers with one or more employees, counting corporate officers and LLC members	Coverage required unless an officer holds a valid exemption. Contractors must make sure subcontractors are covered (Florida Division of Workers’ Compensation).
Florida Chapter 440: other industries	Non-construction employers with four or more employees; agriculture with six regular or 12 seasonal	Coverage required. Penalty is 2 times the premium that would have been paid over the prior 12 months, or $1,000 if greater, plus a possible stop-work order (Fla. Stat. 440.107).
Georgia workers’ comp law	Businesses that regularly employ three or more people, part-time included	Coverage required. Corporate officers count as employees; up to five may waive coverage on form WC-10 (State Board of Workers’ Compensation).
New York Workers’ Compensation Law §2 and §3	Virtually all New York employers, including most nonprofits	Coverage required and notice must be posted (WCL §51). A sole proprietor with no employees is not required to carry it.
Texas elective coverage	Most private Texas employers	Coverage is optional. Employers without it must report that to the Texas Department of Insurance, Division of Workers’ Compensation, and report qualifying injuries.
Monopolistic state funds	Employers in Ohio, North Dakota, Washington and Wyoming	Workers’ comp must be bought from the state fund, not a private insurer; employer’s liability is not included and is added as stop gap coverage.

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Pay less

How to lower the cost

Assign each employee the class code for the work they actually do instead of one blended high-risk code.
Keep payroll records accurate and current; premiums are often audited at the end of the policy term.
Consider a pay-as-you-go policy, whose premium follows your actual payroll through the year instead of a fixed estimate.
Pay annually if the insurer offers a discount for paying in full.
Run a written safety program and use free consultations, such as Texas’s OSHCON service, to keep claims and your experience modification down.
Collect certificates of insurance from every subcontractor so their workers are not treated as yours.

Before you start

What underwriters ask for

Legal entity, FEIN and the states where employees live and work.
Estimated annual payroll split by job duty or class code.
Number of full-time and part-time employees and what each role does.
Owners, officers or LLC members, and whether each will be included or excluded.
Subcontractor costs and their certificates of insurance.
Your experience modification worksheet, if you have one.
Three to five years of loss runs and current or prior policy details.

Common questions

Workers’ compensation insurance: questions

Do I need workers’ comp if I have no employees?

Usually not for yourself. New York does not require it for a sole proprietor with no employees, but some states make exceptions, such as California for roofers, and many general contractors require it from subcontractors anyway.

Do part-time employees count toward the requirement?

Generally yes. Georgia counts part-time workers who are employed regularly, and California’s Labor Commissioner says coverage must include part-time employees.

How is the workers’ comp premium calculated?

The usual formula is class code rate times experience modification times payroll divided by $100. Higher-risk duties carry higher rates, so the same payroll can cost very different amounts.

Does workers’ comp cover independent contractors?

Not if they are truly independent, but states test this strictly. In Florida, if a subcontractor has no coverage, its workers become the hiring contractor’s employees for workers’ comp purposes.

What happens if I don’t carry required coverage?

Penalties can be heavy. California can cite $1,500 per uncovered employee and stop work, and Florida assesses 2 times the premium you should have paid over the prior 12 months, or $1,000 if greater.

Can I buy workers’ comp from a private insurer in every state?

No. Ohio, North Dakota, Washington and Wyoming require coverage through the state fund. Elsewhere, private insurers compete and an independent broker can compare their quotes.

Does health insurance cover work injuries instead?

Usually not. Insureon notes that most health insurance policies exclude work-related injuries and illnesses, which is one reason employers buy workers’ comp even where it is optional.

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Sources (12)

Figures are published third-party estimates, not quotes. Coverage depends on policy terms and underwriting, and rules vary by state. Updated October 2026.