The Best Workers’ Compensation Insurance Companies for 2026

Workers’ compensation insurance (also known as workers’ comp or, sometimes, workman’s comp insurance) is a type of insurance coverage designed to provide financial protection for both employers and employees in the event of a work-related injury or illness. It is paid for by the employer and is one of the only types of commercial insurance that is legally required in nearly every state—Texas is the only exception where coverage is optional for most private employers—even for small businesses.

This guide is for businesses searching for the best workers’ compensation insurance providers. It covers everything you need to know about workers’ comp insurance, including how policies work, what they cover, costs, state requirements, and more. But first, let’s start with our list of the top carriers, including best overall and best for small business.

Best Workers’ Comp Insurance Companies

How We Evaluated the Top Carriers

To find the best workers’ comp providers, we analyzed the top national carriers based on dozens of criteria. Our final rankings heavily prioritized:

• Financial Strength & Stability: We evaluated AM Best, Moody’s, and S&P ratings for every insurer in our analysis—or their primary underwriting partners—to ensure each provider is backed by the proven financial reserves to reliably pay out long-term claims.
• NCCI Class Code Appetite: Not all insurers will write policies for high-risk operations. We prioritized carriers with a broad appetite for tough NCCI class codes, ensuring realistic coverage options for construction, manufacturing, and other hazardous trades.
• Billing Flexibility: Workers’ comp premiums can tie up critical operating capital. We rewarded carriers that offer flexible billing solutions—specifically pay-as-you-go structures that tie premium payments to real-time payroll rather than annual estimates.

For a complete breakdown of our ranking criteria, see our detailed methodology section below.

Key Takeaways

• Workers’ compensation insurance is legally required for most employers in nearly every state, but the rules vary by location, employee count, business structure, and industry. Construction businesses often face stricter requirements, so employers should verify their state’s rules before hiring workers or starting projects.
• The best workers’ comp carrier depends heavily on payroll structure, class codes, and industry risk. Low-risk businesses may have many affordable options, while contractors, manufacturers, trucking companies, and other higher-risk employers need a carrier with an actual appetite for their NCCI class codes.
• Pay-as-you-go billing can be one of the most valuable features for small and growing businesses. Instead of paying premiums based on annual payroll estimates, employers can connect workers’ comp payments to real-time payroll, improving cash flow and reducing the risk of large audit adjustments.
• Claims management matters as much as price. A strong workers’ comp carrier should help injured employees get appropriate care quickly, manage medical costs, and support return-to-work outcomes—not just issue a cheap policy.
• Businesses operating in monopolistic states—North Dakota, Ohio, Washington, and Wyoming—must buy workers’ comp from the state fund and may need separate stop-gap employers’ liability coverage from a private insurer.

Table of Contents

• Best Workers’ Comp Insurance Companies
• Workers’ Compensation Provider Reviews
  • ERGO Next (Best Workers’ Comp Insurance Overall)
  • The Hartford (Best Pay-As-You-Go Workers’ Comp)
  • Travelers (Runner-Up Best Workers’ Comp Carrier)
  • Progressive (Best Workers’ Comp Insurance for Small Business)
  • Hiscox (Runner-Up Best Workers’ Comp for Small Business)
  • Nationwide (Best Workers’ Comp Insurance for Construction)
  • AmTrust Financial (Best Workers’ Comp Insurance for Mid-Sized Businesses)
  • Acuity (Best Regional Workers’ Comp Insurance)
  • ADP (Best Option for Existing ADP Customers)
  • Workers’ Compensation Insurance Carriers by Market Share
• What Is Workers’ Comp Insurance & How Does It Work?
  • What Is Workers’ Compensation Insurance? 
  • How Workers’ Compensation Insurance Works
  • Workers’ Comp Requirements
  • State Workers’ Compensation Funds
• Workers’ Compensation Coverage & Benefits
  • Medical Expenses 
  • Disability Benefits
  • Vocational Rehabilitation
  • Death Benefits 
  • Employers’ Liability
  • Workers’ Compensation Insurance Exclusions
• Workers’ Compensation Insurance Costs 
  • How Much Does Workers’ Compensation Insurance Cost?
  • Factors That Affect Workers’ Comp Rates 
  • Workers’ Compensation Rates by Industry
  • Workers’ Compensation Rates by Occupation
• Frequently Asked Questions
  • How is workers’ compensation insurance different from health insurance?
  • What is the difference between workers’ comp and disability insurance?
  • Are small business owners covered by workers’ compensation?
  • Does workers’ comp cover contractors?
  • Are employees covered when they travel to other states?
• Detailed Methodology: How We Compare Workers’ Compensation Insurance Carriers
• References

Workers’ Compensation Provider Reviews

Because workers’ compensation insurance is a requirement in nearly every state, the core coverage for medical care and lost wages is generally standardized. However, in monopolistic states (North Dakota, Ohio, Washington, and Wyoming), coverage must be purchased through a state fund and typically excludes Employer’s Liability. In competitive markets, insurance companies largely distinguish themselves by other factors, including their reputation with customers, financial ratings, pricing structures, available discounts, claims management practices, and industry expertise. For example, some insurers specialize in high-risk industries like construction, while others don’t offer coverage to businesses in those sectors.

To find the best workers’ comp providers, we considered all these factors and more, ultimately narrowing down our list to the following companies. For a more complete overview of our ranking criteria, refer to our detailed methodology section below.

ERGO Next (Best Workers’ Comp Insurance Overall)

Since its founding in 2016, ERGO Next Insurance has quickly become one of the most accessible and technologically proficient insurance companies on the market. Straightforward and detailed resources on the company’s website connect customers with rapid customer service, claims reporting, and all aspects of their accounts. This makes the company a sound choice for workers’ compensation insurance, which often requires immediate action and a quick response from the insuring company.

To make sure your workers are protected in case of a workplace accident, you’ll want a workers’ compensation insurance policy that fits your budget and covers potential employee medical expenses, loss of income, and more. At ERGO Next, a monthly workers’ compensation premium can cost as little as $14, but there are several factors your final cost depends on. These include how many risks your business or worksite poses, the number of workers you employ, and the nature of your profession.

If a company or business you’re working with requires you to provide evidence of valid business insurance, you’ll need to present a certificate of insurance, also known as a COI. This can be especially crucial for independent contractors, as employers may require a valid certificate before any further collaboration. With ERGO Next, you can request a COI simply by logging into your account. The document will instantly be sent to you and anyone else on your list via a link, email, or text message, both in and outside of normal business hours. Most states legally require employers to have a valid workers’ compensation policy, so having a COI on hand and readily accessible is undoubtedly helpful.

A standout feature of ERGO Next is its pay-as-you-go workers’ compensation option, which links directly to your payroll service. By integrating with platforms like Gusto and QuickBooks, the company calculates premiums based on your actual, real-time payroll data rather than yearly estimates. This helps small businesses maintain better cash flow by ensuring they only pay for the coverage they need and minimizes the risk of unexpected, large audit adjustments at the end of the policy year.

Reflecting its strong market presence, ERGO Next maintains an excellent reputation among its customers. Its rating from the Better Business Bureau is an A+, which reflects its ability to respond to and address customer complaints that do arise. ERGO Next also has a 4.5 out of 5 stars on Trust Pilot and an AM Best Financial Strength Rating of A+ as of 2026.

ERGO Next Insurance is experienced in the essentials of small business insurance, including workers’ compensation policies. The company is proficient at creating tailored policies for each individual business and offers the convenience of accessing nearly everything its customers need online. These things, combined with ERGO Next’s broad range of commercial policy offerings, make it our pick as the Best Workers’ Compensation Insurance Company.

The Hartford (Best Pay-As-You-Go Workers’ Comp)

Overview

The Hartford is a Connecticut-based insurer that has been in continuous operation since 1810. Today, The Hartford is the second-largest provider of workers’ comp insurance in the U.S. and one of the largest providers of commercial insurance overall.

Company Reputation

The Hartford serves more than 1.3 million small business customers and has been in business for over 200 years. With such a long track record in various forms of commercial insurance, The Hartford has one of the strongest reputations of any insurer. The Hartford maintains an unaccredited A+ rating with the Better Business Bureau, an indication that The Hartford is trustworthy in dealing with its customers.

One downside of The Hartford is its J.D. Power rating. According to the most recent J.D. Power Small Commercial Insurance Study released in August 2025, The Hartford scored 685 out of 1,000 for customer satisfaction, which was below average for the category.

Coverage Options

The Hartford’s workers’ compensation coverage is some of the best on the market today. The Hartford goes above and beyond what many other insurers provide in their standard packages with features like voluntary compensation, pay for loss of earnings, and stop-gap coverage for employer liability, all of which would require endorsements with other carriers. The Hartford also offers extended coverages (with slightly higher premiums) that include greater liability protections than the industry standard.

In addition to the features described above, The Hartford also has several fairly unique offerings in terms of care and treatment. For one, they have one of the largest networks of medical providers and pharmacies addressing workplace injuries—more than 1 million and 65,000, respectively—and nurse case managers to coordinate care and treatment. This means that The Hartford’s workers’ compensation policies effectively address not only the financial implications of an incident but also injured workers’ health and wellbeing.

Price

One of The Hartford’s best features is its “pay-as-you-go” option, where the monthly premium is based on the employer’s actual payroll spend, versus an estimate of payroll that most insurance providers base premiums on. Customers may also be able to save by bundling their workers’ compensation policies with other forms of commercial insurance offered by The Hartford.

Since your insurance costs will depend on features unique to your business, the most accurate pricing information about The Hartford’s workers’ comp insurance will come directly from the provider. You can initiate a quote on The Hartford’s website to get a sense of what you might pay and a representative from The Hartford will follow up.

Industry Specialization

The Hartford maintains a robust specialization in the construction industry through its dedicated Construction Group, which has served the sector for over 40 years. This team provides tailored products like wrap-up policies (OCIP/CCIP) and specialized liability coverages, and features underwriters and risk engineers with deep jurisdictional and job-site expertise. This extensive background and specialized focus make The Hartford a reliable provider for construction companies as well as businesses in nearly any other industry.

Financial Strength

The Hartford is one of the longest-standing companies (let alone insurers) in the United States. With this extensive experience, The Hartford has a demonstrated track record of financial strength and stability. The major credit ratings agencies back this up, with AM Best affirming its A+ rating and Moody’s upgrading the company’s insurance financial strength rating to Aa3 in 2025, both of which are considered excellent. The Hartford is also a publicly traded company, so anyone interested in learning more about the company’s financial situation has access to the company’s financial statements on their investor relations page.

Recommendation

Given its dominance in the commercial insurance space, excellent financials, and convenient pay-as-you-go options, The Hartford was a strong contender for our top pick. However, some recent customer satisfaction issues prevented them from achieving the #1 spot in our rankings. That said, for customers looking for the convenience of a pay-as-you-go workmans’ comp policy, we highly recommend The Hartford.

Travelers (Runner-Up Best Workers’ Comp Carrier)

Travelers Insurance is a well-established insurance company that offers workers’ compensation insurance for a variety of industries. As of the latest data from 2024, Travelers is the largest provider of workers’ compensation insurance in the United States.

Travelers Insurance is a property and casualty insurer that has been in existence since the mid-1800s. While it was founded as a fire insurance provider, the company now offers a variety of insurance products for both individuals and businesses throughout the world. The company has earned excellent financial strength ratings from AM Best (A++) and S&P (AA) as of 2026. Travelers has a lower JD Power score compared to some peers, but it maintained an excellent workers’ compensation market share of 6.67% in 2024.

As is standard in the industry, Travelers workers’ compensation policies cover medical expenses and lost wages for employees injured on the job, alongside liability coverage to protect businesses in the event of a lawsuit. Travelers also offers resources to help businesses reduce risk and prevent incidents from occurring in the first place.

One area where Travelers stands out is with its claims team. If an incident does occur at your business and you need to file a claim, Travelers employs over 2,000 claims professionals to provide expert service throughout the claims process, as well as nurses and other medical professionals who will work individually with injured employees to determine the best treatment plan and provide assistance as they recover.

Another thing we like about Travelers is that the company sells its commercial policies through a network of independent agents and brokers, rather than through captive agents that can only sell policies from a single insurer. This gives customers confidence that when they ultimately select a Travelers policy, the policy is the best choice for them.

One benefit of Travelers is the company’s TravPay program, which offers pay-as-you-go workers’ compensation premiums. This solution allows premiums to be based on real-time payroll data rather than historical estimates, ensuring payments are accurate and helping to prevent the over- or underpayments that can disrupt cash flow.

One final point to mention is that Travelers’s NAIC Complaint Index specifically for workers’ comp is lower than the industry average. This score, which evaluates the number of complaints compared to the market share held by the company, indicates that the carrier receives fewer complaints than expected for a company of its size.

Despite these minor drawbacks, Travelers remains an excellent option for workers’ compensation insurance. Because of its size and experience, network of independent agents, and excellent financial strength ratings, we recommend Travelers as the Runner-Up Best Workers’ Compensation Insurance Company.

Progressive (Best Workers’ Comp Insurance for Small Business)

Overview

Founded in 1937, Progressive is one of the most notable insurers in the U.S., with particular strength for both personal and commercial vehicle insurance. However, through its Progressive Advantage Business Program, Progressive is also a major player in many other forms of small business insurance, including workers’ comp.

Progressive offers the Advantage Business Program, which helps small businesses obtain the insurance coverage they need, even if it’s not directly offered by Progressive. Through this program, Progressive can connect businesses to third-party insurers for certain types of commercial insurance, including workers’ compensation in many cases. This allows businesses to bundle different commercial policies, saving money and accessing Progressive’s industry-leading coverages such as commercial truck and commercial auto. However, it’s important to note that managing different terms and requirements through separate carriers may be required.

Progressive demonstrates expertise in various small business industries by offering an extensive list of coverage types tailored to different industries and professions. Customers can be confident that whether they obtain coverage directly through Progressive or its partner carriers, they will find the right types and levels of coverage for their industry. Progressive also provides a contractors’ insurance package specifically designed for contractors and construction professionals through the Progressive Advantage Business Program.

Progressive offers competitive pricing through its Advantage program. According to Progressive’s website, the nationwide average monthly cost for workers’ compensation through Progressive Advantage is approximately $121, though the median cost is lower at $76 per month. However, the actual cost of workers’ comp coverage will depend on factors such as the state, payroll, and claims history.

To obtain pricing information, customers can start a quote on the Progressive website or speak to an agent. By providing some information about their company, customers will receive several options with premiums and deductibles, helping them find the right coverage that suits their business needs and budget.

Progressive is financially secure and highly rated by reputable rating agencies. It has earned an A+ rating from AM Best as of 2026, AA from S&P, and Aa2 from Moody’s, indicating its financial strength and low risk. Progressive also maintains a strong reputation with customers, earning an unaccredited A+ rating with the BBB, though its level of complaints with the NAIC is higher than the industry average.

Overall, Progressive is an excellent choice for workers’ compensation and other small business coverages. With its strong finances, competitive pricing, and solid reputation, it stands out as a reliable option. The Progressive Advantage Program simplifies the insurance shopping experience by providing access to various forms of commercial coverage not directly underwritten by Progressive. With its industry knowledge and offerings, Progressive is highly recommended as the Best Workers’ Compensation Insurance Provider for Small Businesses.

Hiscox (Runner-Up Best Workers’ Comp for Small Business)

Hiscox specializes in insurance for small businesses and offers all of the most common commercial policies, including workers’ comp.

Hiscox Insurance is a well-established insurance company with origins dating back to 1901. They have 125 years of experience providing various types of business insurance. Today, they operate in 13 countries and have over 600,000 small business customers.

Hiscox workers’ compensation insurance covers medical costs and a percentage of lost wages for employees who become injured or ill while on the job. Unlike some of its larger competitors, Hiscox does not offer the same level of risk management services or resources for customers to help prevent workers’ comp claims in the first place. However, given that these services mostly cater to larger firms, this likely isn’t much of a concern for its small business clientele.

On the other hand, Hiscox is known for offering more affordable policies than many of its competitors. This, in part, is accomplished by bundling multiple policies together into affordable packages tailored to different industries. For example, an architecture and engineering firm could bundle workers’ compensation insurance with professional liability insurance and a general liability policy.

Hiscox also maintains a strong reputation for its commitment to convenience and seamless online access, ensuring a hassle-free experience for customers seeking quotes, managing policies, and filing claims. The company offers a streamlined process for obtaining estimates on workers’ compensation insurance, allowing customers to quickly generate a quote by completing a form on their website or by consulting with an agent. When it comes to filing a claim, Hiscox provides multiple channels for submission, including online, telephone, and mail options. With their online claims center operating 24/7, customers have round-the-clock access to initiate and track their claims digitally. Alternatively, Hiscox encourages customers to reach out to the agent through whom they purchased their insurance, providing an additional avenue of support and familiarity during challenging situations. This personalized approach ensures that customers have the option to engage with a trusted contact while navigating the claims process.

Hiscox has earned an A+ rating with the BBB organization, which indicates satisfactory and timely responses to customer complaints that do arise. While NAIC does not have any data on complaints for Hiscox workers’ compensation insurance, the company has a .90 complaint index for all insurance types, which indicates slightly fewer complaints than expected given its size. Hiscox has also earned excellent financial strength ratings, with A ratings from AM Best and S&P affirmed most recently in 2025.

In summary, Hiscox stands as a highly regarded insurance company with a long-standing reputation of providing insurance coverage tailored specifically for small businesses. With robust financial ratings, they demonstrate their stability and reliability. Moreover, they provide convenient online quotes and claims services, making it easier for customers to manage their insurance needs. Considering these factors, we confidently endorse Hiscox as having the Runner-Up Best Workers’ Compensation Insurance for Small Businesses.

Nationwide (Best Workers’ Comp Insurance for Construction)

Overview

Nationwide is one of the largest insurers of any type in the U.S. Founded in 1925 in Ohio, Nationwide today truly lives up to its name, offering a comprehensive set of commercial insurance products in states across the country.

Company Reputation

Nationwide has one of the strongest company reputations among commercial insurance providers. Of the companies evaluated in this guide, Nationwide performed well in the most recent J.D. Power U.S. Small Commercial Insurance Study, consistently scoring above the industry average for customer satisfaction. While providers like Erie Insurance and State Farm currently hold the top rankings, Nationwide remains a highly-rated choice for small business owners. Nationwide is also accredited by the Better Business Bureau with an A+ rating, meaning that they meet the BBB’s highest standards for fair business practices.

Coverage Options

As a leading commercial insurance provider, Nationwide has a variety of options available in terms of coverage. Most businesses will find it convenient to work with Nationwide to identify a package of commercial coverages that make sense for them, including not only workers’ compensation but other protections for property, liability, auto, and other industry-specific coverage.

Nationwide’s workers’ compensation policy covers essential needs like paying for medical treatment, replacing lost wages, and protecting the business from liability claims. Nationwide also has a variety of endorsements available to extend your coverage if you are in an industry or location that creates greater coverage needs for your business.

Price

As with other insurance carriers, the price you pay for Nationwide’s workers’ compensation insurance coverage will depend heavily on factors unique to your business, including your state, payroll, industry, and claims history. To learn more about what Nationwide’s coverage will cost your business, you can start a quote through Nationwide’s website or call to speak to an agent and learn more. Since Nationwide offers a variety of other commercial insurance policies, you should be sure to ask about discounts for packaging or bundling insurance products with Nationwide.

Industry Specialization

Nationwide is devoted to helping businesses find the appropriate coverages for their industry and needs. Nationwide has a helpful guide on its website to highlight important coverage considerations for different sectors like contractors, retail, professional offices, wholesalers, and more. These can include both workers’ compensation specifically and various other forms of commercial insurance important to your business. Nationwide’s expertise in a variety of industries, including construction, makes it easy to secure the right coverage.

Nationwide’s industry knowledge also extends to resources and services for risk management. For example, Nationwide has great resources for companies to evaluate their health and safety practices and work to reduce the risk of incidents that lead to claims.

Financial Strength

Nationwide is one of the leading property and casualty insurers in the U.S. by premiums written, so they have impressive financial resources at their disposal. Nationwide also demonstrates excellent financial strength ratings from the top rating agencies as of 2025, with A, A2, and A+ marks from AM Best, Moody’s, and S&P, respectively.

Recommendation

Nationwide has good policy options, impressive financial strength, a strong reputation, and competitive prices, which make it a great all-around choice. However, Nationwide is especially strong on industry expertise, particularly for contractors, and for that reason, we recommend Nationwide as the Best Workers’ Compensation Provider for Construction Businesses and Contractors.

AmTrust Financial (Best Workers’ Comp Insurance for Mid-Sized Businesses)

AmTrust Financial is a multinational property and casualty insurer that has rapidly grown to become one of the top providers of workers’ compensation insurance in the United States. Ranking third in overall U.S. market share, AmTrust specializes in providing tailored coverage to small and mid-sized businesses across a variety of low- to medium-hazard risk classes.

Company Reputation

Since its founding in 1998, AmTrust Financial has built a massive footprint in the commercial insurance space. While it doesn’t have the centuries-old history of some legacy carriers, it has quickly captured a significant portion of the market—currently sitting as the third-largest workers’ compensation carrier in the U.S. with a 5.9% market share. They work closely with an extensive network of independent wholesale and retail agents to distribute their policies. This provides customers with localized, expert support and advocacy, even if it sacrifices some of the instant direct-to-consumer convenience found with newer digital carriers.

Coverage Options

AmTrust offers standard workers’ compensation coverage that handles medical expenses, lost wages, and employers’ liability. Where AmTrust truly excels is in its specialized loss control services. They provide policyholders with extensive safety training materials, risk management tools, and expert consultations designed to identify workplace hazards before they result in a claim. This proactive approach not only keeps employees safe but helps businesses manage their long-term insurance costs.

Price

AmTrust is known for offering competitive pricing, particularly for its target market of small and mid-sized businesses. Like many top-tier providers, AmTrust offers a pay-as-you-go billing solution, which ties premium payments directly to real-time payroll data rather than annual estimates. This helps businesses avoid large upfront deposits, improves monthly cash flow, and significantly minimizes the risk of a premium adjustment audit at the end of the year. Because AmTrust works through brokers, exact pricing requires initiating a quote through a local appointed agent.

Industry Specialization

AmTrust intentionally focuses its underwriting appetite on low- and medium-hazard industries. While they might not be the go-to carrier for high-risk heavy construction or roofing, they are incredibly well-equipped for “Main Street” businesses, restaurants, retail shops, professional offices, and wholesale operations. Their underwriters have deep, specialized expertise in these specific niches, allowing for highly accurate risk assessment and tailored policies.

Financial Strength

As of 2026, AmTrust Financial holds a solid A- (Excellent) financial strength rating from AM Best. This rating provides policyholders with the peace of mind that the company has the necessary financial reserves to reliably pay out claims, regardless of broader economic conditions.

Recommendation

With its extensive market presence, proactive focus on loss control, and flexible pay-as-you-go billing options, AmTrust is a formidable option in the commercial insurance landscape. Because of their specialized underwriting expertise and comprehensive resources for growing companies, we recommend AmTrust Financial as the Best Workers’ Compensation Insurance for Mid-Sized Businesses.

Acuity (Best Regional Workers’ Comp Insurance)

Overview

Founded in 1925 and headquartered in Sheboygan, Wisconsin, Acuity Insurance is a highly regarded mutual insurance company. While it operates primarily as a regional carrier and does not offer coverage in every U.S. state, Acuity provides a robust selection of commercial insurance products—including workers’ compensation—through a vast network of independent agents.

Company Reputation

As a mutual insurance company, Acuity is owned by its policyholders rather than Wall Street investors, allowing it to focus on long-term stability and customer relationships rather than short-term financial tactics. This structure has paid off: Acuity boasts an exceptional reputation among both its independent agents and its customers. The carrier frequently highlights its 96% claims satisfaction rate, and it maintains high marks with the Better Business Bureau. While smaller in scale than national giants like Travelers or The Hartford, Acuity’s focus on community and consistent underwriting discipline has earned it fierce loyalty in the regions it serves.

Coverage Options

Acuity’s workers’ compensation policies cover all standard requirements, including medical expenses, vocational rehabilitation, and lost wages. To set itself apart, Acuity heavily invests in value-added services that assist both the employer and the injured worker. This includes the Acuity Nurse Helpline, which provides immediate medical guidance following a workplace injury. Furthermore, Acuity utilizes a robust medical bill review program that carefully audits claims for duplicate charges, incorrect coding, and fee schedule compliance. According to the company, this process reduces medical fees by an average of 60%, ultimately helping to keep employers’ experience modifiers (and future premiums) in check.

Price

Because Acuity distributes its policies exclusively through independent insurance agents, direct pricing data and instant online quotes are not available on their website. Premium costs will vary based on your specific industry, location, payroll size, and claims history. However, Acuity does offer flexible commercial billing options, including multiple installment plans, to help businesses manage their cash flow. Additionally, businesses that bundle their workers’ compensation coverage with Acuity’s Bis-Pak® (business package policy) or commercial auto insurance may be eligible for multi-policy discounts.

Industry Specialization

Acuity writes workers’ compensation for a wide variety of businesses but has dedicated, deep expertise in a few core sectors. The company is particularly well-known for its focus on trucking and motor carriers, employing in-house trucking experts to tailor coverages and risk management resources specifically for the road. They also have specialized underwriting and loss control programs tailored for construction contractors, manufacturers, and retail merchants. If your business falls into one of these categories, Acuity’s industry-specific knowledge can be a massive advantage when navigating safety regulations and mitigating claims.

Financial Strength

For a regional carrier, Acuity possesses world-class financial stability. In early 2026, AM Best affirmed Acuity’s Financial Strength Rating of A+ (Superior) for the 24th consecutive year, highlighting the company’s strongest level of risk-adjusted capitalization, prudent reserving practices, and consistent investment income. Acuity also holds an A+ rating from Standard & Poor’s. This dual-superior rating places Acuity among a highly select group of carriers nationally, assuring business owners that the company is financially equipped to handle long-term workers’ compensation claims.

Recommendation

Acuity proves that you don’t have to be a massive national conglomerate to provide top-tier commercial coverage. With its outstanding financial strength, stellar claims satisfaction, and specific expertise in complex industries like trucking and manufacturing, Acuity is a fantastic option for businesses operating within its coverage footprint. Because of its localized expertise and policyholder-first approach, we highly recommend Acuity as the Best Regional Workers’ Compensation Insurance Provider.

ADP (Best Option for Existing ADP Customers)

Overview

ADP is one of the leading providers of human resources and payroll technologies in the market today, and ADP’s affiliate, Automatic Data Processing Insurance Agency (ADPIA), specializes in helping small and mid-sized employers find commercial insurance coverages and workers’ comp policies.

Company Reputation

ADP has been offering human resources and payroll services and technology since 1949, and its affiliate, ADPIA, has operated since 1992. ADPIA serves more than 200,000 businesses, helping them to obtain group health insurance, workers’ comp policies, and other commercial insurance products. While ADP is not typically included in J.D. Power’s insurance-specific rankings, it is frequently evaluated in other categories, such as retirement plan digital experience and direct banking. ADP also rates well with the Better Business Bureau. The company holds an A+ rating and is accredited with the BBB, which means that ADP meets the BBB’s highest standards for fairness and transparency with customers.

Coverage Options

ADPIA is an insurance broker, rather than a direct carrier of insurance. This means that businesses shopping for insurance through ADPIA will be connected to another carrier to purchase the policy. As a broker, ADPIA partners with many top insurance carriers nationwide and can connect employers with policies that meet legal requirements in the state(s) where they operate. ADPIA also offers group health insurance and commercial coverages like BOPs and commercial auto.

One of the advantages of working with ADPIA as an option for workers’ comp is that the company’s payroll and HR technology helps make it easier to manage workers’ comp policies and premium payments. With the Pay-By-Pay® Premium Payment Program, ADP automatically calculates and forwards workers’ comp payments to the insurance carrier each time a business runs its payroll. This pay-as-you-go structure results in more accurate premium payments, improved cash flow, and easier audit processes.

Price

Initiating quotes with ADPIA is easy and can be done through an online form or by telephone. ADP helps shoppers identify coverages they might need, including workers’ comp and other commercial policies, and offers quotes from within ADPIA’s network of partner carriers. If using ADPIA for workers’ comp coverage, the Pay-By-Pay program allows customers to avoid paying upfront premium deposits, and ongoing premium payments are based on actual payroll, which means that premiums should be more accurate over time and over- or under-payments will be less likely.

Industry Specialization

As a major player in payroll, HR, and financial services, ADP and ADPIA work with a wide variety of industries and businesses of different sizes. But ADPIA is a particularly good option for businesses with complex needs or a high-risk profile that might otherwise limit their options for workers’ comp coverage. ADPIA states that its network of carriers provides good coverage options for more hazardous industries, including specialties like construction, carpentry, and masonry.

Financial Strength

ADP has its own credit ratings including an Aa3 from Moody’s and an AA- from S&P, but it is important to remember that ADPIA is a broker rather than an insurance carrier. While ADPIA advertises that it works with some of the top-rated insurers in the country, businesses looking for workers’ comp coverage through ADPIA should evaluate the financial strength of the carriers that ADPIA connects them with.

Recommendation

ADPIA is a good choice for many reasons, but its standout attribute is the ability to use ADP payroll technology for payment processing, which increases efficiency and reduces over- and under-payments on workers’ compensation premiums. For this reason, ADP is our top choice for existing ADP customers.

Workers’ Compensation Insurance Carriers by Market Share

Rank	Company	Market Share (2024)
1	The Hartford	6.7%
2	Travelers	6.6%
3	AmTrust	5.9%
4	Zurich	5.0%
5	Chubb	4.3%
6	Berkshire Hathaway	3.5%
7	State Insurance Fund	2.9%
8	Liberty Mutual	2.8%
9	Old Republic	2.7%
10	BCBS of Michigan	2.5%

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What Is Workers’ Comp Insurance & How Does It Work?

Before committing to a workers’ compensation insurance policy, it’s helpful to understand the basics of these policies and the various coverage options available.

What Is Workers’ Compensation Insurance?

Workers’ compensation insurance, also known as workers’ comp or workmans’ comp, is a form of coverage required for most employers in nearly every state, designed to protect workers who become injured or suffer an illness on the job. Workers’ comp policies consist of two primary parts:

• Part One: Workers’ Compensation Insurance
• Part Two: Employers’ Liability Insurance

The workers’ compensation portion of the policy offers crucial protection by providing benefits to employees who experience work-related injuries or illnesses. It covers various expenses, including medical treatment, rehabilitation costs, and lost wages. In return for these benefits, employees generally agree to waive their right to sue their employer for negligence pertaining to the incident.

The second part of the policy, known as employers’ liability insurance, serves as an additional layer of coverage. It protects employers against lawsuits for work-related injuries or illnesses that are not covered by statutory workers’ compensation benefits, such as those involving third-party over actions or loss of consortium. Employers’ liability insurance covers legal defense costs, settlements, or judgments that may arise from such lawsuits.

By combining these two components, workers’ compensation insurance aims to ensure that employees receive necessary benefits while providing employers with protection against legal claims related to workplace injuries. It establishes a system that supports injured workers, promotes workplace safety, and mitigates the risk of extensive litigation.

How Workers’ Compensation Insurance Works

Most employers are legally required to obtain workers’ compensation insurance coverage, either through a private insurance carrier or through a state-operated fund (more on that below). Should a qualified workplace injury occur, the insurer agrees to pay all benefits owed to the employee subject to the state’s workers’ compensation laws. Part One of a workers’ compensation policy is unique in that there are no standard policy limits on the benefits provided, as the insurer agrees to pay all amounts required by state law. While employees do not pay deductibles for their care, employers may choose policies with deductible options to help manage their premium costs, which are based primarily on the company’s payroll and the specific duties carried out by its workers.

Employers are responsible for informing their employees about their workers’ compensation benefits and providing them with the necessary information on how to report incidents. The specific reporting procedures may vary by jurisdiction, but they generally involve notifying the employer and filing the claim with the insurance carrier within a certain timeframe. Information collected on the claim form typically includes details about the injury or illness, medical treatment received, and other relevant information.

The insurance company will review the claim to assess its validity and determine if it falls within the scope of covered injuries or illnesses. This typically involves investigation, consultation with medical professionals, and verification of the incident. If the claim is approved, the injured employee becomes eligible to receive certain benefits, such as medical expenses, rehabilitation services, disability payments, and in the case of fatal injuries, death benefits for dependents.

It’s important to note that employees are not required to accept the insurer’s initial offer. If the employee is not satisfied with the proposal, he or she can dispute it through the state’s workers’ compensation board or commission, seeking a restructured settlement or a lump-sum payment. However, because workers’ compensation is considered an ‘exclusive remedy,’ employees generally cannot sue their employer for additional damages like pain and suffering, even if they are unhappy with the settlement.

Employers’ liability insurance (Part Two) exists to protect the employer in the rare event of a lawsuit that falls outside of these standard statutory protections, such as a third-party over suit or a claim filed by a family member for loss of consortium. However, it is usually in the best interest of both sides to resolve the dispute outside of court, as trials are costly, time-consuming, and unpredictable.

Workers’ Comp Requirements

Workers’ compensation is subject to state-level regulation in the United States, and the specific requirements and coverage details can vary. With the exception of Texas and South Dakota, workers’ compensation insurance is mandatory in some form in every state. However, sole proprietors and partnerships without employees are usually not required to secure coverage, with some notable exceptions for high-risk trades. In California, for example, all licensed contractors will be required to maintain workers’ compensation insurance by 2028 regardless of whether they have employees. While the majority of states require all businesses with employees to have workers’ compensation coverage, there are variations in the threshold for coverage based on the number of employees.

For instance, while states like Missouri and Alabama generally mandate coverage for employers with five or more employees, construction-related businesses are subject to stricter legal requirements. In Missouri, any employer in the construction industry with one or more employees must carry a policy, and in Alabama, the same mandate applies to those building single-family residential homes.

Given these differences, employers must familiarize themselves with the specific requirements of their state to ensure compliance with workers’ compensation laws. In certain states that require companies to carry workers’ compensation insurance, like California, not having it is considered a criminal offense that can result in fines, imprisonment, or time in county jail.

State Workers’ Compensation Funds

In most states, employers can purchase workers’ compensation insurance from private insurance carriers that compete in the market. However, so-called monopolistic states have established exclusive state-operated insurance programs that are the only option for employers to obtain workers’ compensation coverage. Currently, North Dakota, Ohio, Washington, and Wyoming are the only four monopolistic states in the U.S. where employers must obtain workers’ comp coverage through the state.

In addition to monopolistic state funds, some states offer competitive state funds that give employers the option of obtaining coverage through the state or through a private carrier. These funds routinely serve as a backup option for employers who are unable to obtain workers’ comp coverage through a private carrier due to their industry, history of claims, or overall risk profile. States with competitive state funds include California, Colorado, Hawaii, Pennsylvania, and Texas, among others.

While workers’ compensation insurance obtained through private carriers usually includes two parts—workers’ compensation coverage and employers’ liability coverage—policies obtained through monopolistic state funds do not include the employers’ liability component. Because of this, businesses that secure workers’ comp coverage through a monopolistic fund usually purchase separate ‘stop-gap’ employers’ liability coverage through a private carrier. This can either be purchased as a standalone policy or added as an endorsement to an existing general liability policy.

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Workers’ Compensation Coverage & Benefits

Workers’ compensation policies provide coverage for all employees of an insured company, regardless of their employment status (full-time, part-time, or seasonal). However, business owners and partners are typically not automatically covered by the workers’ compensation policy, though they may often elect to be included. Independent contractors are excluded from coverage entirely, as they are not legally considered employees and must provide their own insurance.

The injuries or illnesses covered by workers’ compensation insurance can occur both within and outside the workplace but they must be directly related to the job duties. For example, an employee injured in a vehicle accident commuting to work will not qualify for workers’ comp coverage; however, an employee injured while driving for work (such as a delivery driver) will qualify.

Workers’ compensation policies offer coverage for a diverse range of conditions and injuries. These can include acute injuries such as fractures, cuts, or sprains, as well as chronic conditions like cancer, asthma, carpal tunnel syndrome, or occupational hearing loss. Additionally, workers’ comp can provide benefits for injuries resulting from workplace violence and, depending on state law, mental health conditions like post-traumatic stress disorder (PTSD) arising from a specific traumatic workplace event.

While the specific coverage details vary by state, standard workers’ compensation policies provide benefits to injured workers that fall into the following four primary categories, each of which is explored in more detail below.

• Medical expenses
• Disability benefits
• Vocational rehabilitation
• Death benefits
• Standard policies also include employers’ liability coverage, which helps cover legal costs, settlements, and judgments if a business is sued by an employee for damages not covered by statutory workers’ compensation benefits.

Medical Expenses

When workers sustain work-related injuries or illnesses, they have the right to receive all reasonable and necessary medical treatment, typically provided by an authorized physician or a doctor within their employer’s Medical Provider Network (MPN). This encompasses a range of healthcare services, including doctor visits, diagnostic tests, surgeries, hospitalizations, nursing care, medications, physical therapy, and medical equipment such as crutches or wheelchairs.

To manage costs, states implement utilization management programs based on Evidence-Based Medicine (EBM) and specific Medical Treatment Guidelines (MTGs). These frameworks ensure care remains appropriate and may include drug formularies, second-opinion requirements, and limits on treatment frequency. While many services require pre-authorization through digital portals, some 2026 regulations now offer exemptions for the first 30 days of treatment to ensure injured workers receive immediate care without administrative delays.

Disability Benefits

Disability benefits serve to replace a portion of the wages an employee will lose as a result of missed work due to the injury. Depending upon the type of injury and the impact it has on an employee’s ability to work, there are four different types of disability benefits available.

• Temporary total disability: This type of disability pay applies when a worker is entirely unable to work during a relatively short-term recovery period. For example, a worker who requires an eye procedure that leaves them temporarily unable to see may receive temporary total disability benefits during that time. Typically, following the waiting period, a worker can expect these benefits to be calculated as 66.67%, or two-thirds, of their weekly income and may be subject to minimum and/or maximum amounts.
• Temporary partial disability: Temporary partial disability benefits are available when a worker is partly unable to work, either in duration or in scope, during a relatively short-term recovery period. For example, a worker who injures their back might only be able to work part-time or in a different capacity. In these situations, the worker may receive temporary partial disability benefits. Typically, a worker receiving temporary partial disability benefits can expect to receive two-thirds of the difference between their pre-injury average weekly wage and their current, limited earnings. This benefit, when added to their light-duty wages, helps bridge the gap created by their reduced working capacity during recovery.
• Permanent total disability: Permanent total disability benefits are available when a worker is entirely unable to continue earning as a result of a lasting injury or illness. For example, a worker who suffers from paralysis or a severe brain injury may recover permanent total disability benefits. Typically, a worker can expect these benefits to be 66.67% of their average weekly wage. Depending on state laws, these payments may continue for the duration of the worker’s life or be capped at a specific number of weeks or a maximum total benefit amount.
• Permanent partial disability: Permanent partial disability pay applies when a work-related injury results in a lasting physical impairment or limits a worker’s future earning capacity. For example, a worker who suffers permanent hearing loss or a restricted range of motion may recover permanent partial disability benefits even if they return to their previous role at the same salary. The factors that determine the amount paid include the extent of the physical impairment, loss of wages, and future earning capacity. Most states use a specific ‘schedule of injuries’ or impairment ratings to determine the benefit amount for different types of permanent losses.

The table below summarizes the different types of disability benefits, when they apply, and what coverage should be expected in each case:

Disability Type	Description	Example	Typical Coverage*
Temporary Total	Temporary disability that prevents work during recovery	A construction worker breaks his leg, needs surgery, and can’t work during the recovery.	2/3 of average weekly income for a limited time
Temporary Partial	Temporary disability that limits work during recovery	A secretary undergoes surgery for carpal tunnel syndrome. He can work, but earns less in a modified role during his recovery.	2/3 of the income difference
Permanent Total	Permanent disability that prevents future work	An industrial worker becomes paralyzed after an equipment accident and cannot work again.	2/3 of average weekly income for life or a capped duration, depending on state laws
Permanent Partial	Permanent disability that limits future work	A factory worker suffers an eye injury that permanently limits his eyesight.	Varies

Vocational Rehabilitation

A worker whose injury or illness caused a permanent partial disability may be entitled to vocational rehabilitation benefits, also sometimes referred to as supplemental job displacement benefits. This money is used to train or retrain a worker to be able to work in a new capacity.

For example, in California, supplemental job displacement benefits include training at any authorized place, such as any California public school; the cost of licensing, certification, and testing fees; the cost of any tools or materials needed for training; etc. The benefit comes in the form of a non-transferable voucher worth $6,000 and also can be used for expenses put towards locating a new job and even reimburses some miscellaneous expenses.

Employers can often make rehabilitation benefits obsolete by offering suitable regular, modified, or alternative work within the statutory period, which is 60 days from the date the claims administrator receives the medical report confirming the permanent partial disability. If not, then this aspect of workers’ comp insurance is designed to cover the process of returning a permanently partially disabled worker to the workforce.

Death Benefits

Workers’ compensation death benefits are designed to provide financial compensation to the dependents of a worker who dies as a result of work-related causes. Death benefits may cover funeral expenses and provide income replacement for those who relied on the deceased worker’s earnings. While the eligibility and amounts of obtainable benefits vary by state, whether someone is a total or partial dependent will impact the amount of money they receive.

Common examples of total dependents include minor children, disabled adult children, and in many jurisdictions, a surviving spouse regardless of their income. Depending on state-specific laws, examples of partial dependents may include a working spouse, grandchildren, parents, siblings, or in-laws who were only partially supported by the deceased worker’s earnings.

Death benefits may include various forms of financial compensation, such as a lump-sum payment or ongoing periodic payments. The amount and duration of the benefits depend on the laws and regulations of the specific jurisdiction, as well as the worker’s average wage or income.

For example, in California, one total dependent will receive weekly installments at the total temporary disability (TTD) benefits rate, with a base benefit of $250,000 plus $10,000 for burial expenses. For 2026, these weekly installments will be no less than $264.61. This base benefit raises to $290,000 for two total dependents and to $320,000 for three or more. However, these figures are not absolute caps for all survivors; payments to totally dependent minor children continue until the youngest child reaches age 18, and benefits for disabled adult children can continue for life, even if the total paid exceeds the standard limits.

In Colorado, installments are paid at a similar rate (66.67% of the deceased worker’s weekly salary), but unlike California, there is no aggregate total cap on benefits for a surviving spouse. Instead, benefits are typically paid for the spouse’s lifetime or until they remarry, subject to a weekly maximum that is set by law each year ($1,396.85 for the 2025–2026 period). The Colorado Director of Workers’ Compensation has the discretion to apportion these payments among multiple dependents. Reference Colorado State’s website for more information.

Be sure to research your state’s workers’ compensation laws in order to know how death benefits pay in your jurisdiction.

Employers’ Liability

As discussed above, workers’ compensation policies purchased through private insurance carriers have two parts. Part One (Workers’ Compensation) provides coverage for state-specific workers’ compensation benefits, while Part Two (Employers’ Liability) protects employers from certain lawsuits that are not barred by the ‘exclusive remedy’ doctrine, such as those involving third-party over actions or legal theories where the employer’s liability extends beyond standard workers’ compensation statutes.

The workers’ compensation component is a legal requirement for most employers, covering the costs associated with work-related injuries or illnesses sustained by employees. It includes coverage for medical expenses, rehabilitation costs, and lost wages (either in the form of disability payments or death benefits). The benefits provided under Part One apply regardless of who is at fault. While wage replacement benefits are subject to statutory limits set by state laws, medical coverage is generally unlimited. In return for receiving Part One benefits, employees will typically waive their right to sue their employer for negligence.

While employers’ liability insurance is an integral part of standard workers’ compensation policies in most states, employers in monopolistic states (OH, WA, WY, and ND) must typically purchase it separately as ‘stop gap’ coverage. It is designed to provide employers with protection in the event that employees pursue legal action beyond the benefits offered by workers’ compensation. The employers’ liability component covers the costs of legal defense, settlements, and judgments. Unlike Part One of the policy, where fault is not a requirement for receiving benefits, Part Two requires employees to demonstrate that the employer was at fault for their injuries through negligence. It is important to note that Part Two specifically excludes coverage for intentional misconduct or injuries purposefully caused by the employer.

It’s important to note that employers’ liability coverage comes with specific policy limits. These limits determine the maximum amount of money that the insurance company will pay for legal expenses and settlements. Unlike workers’ compensation coverage, which is ‘statutory’ and generally provides unlimited coverage for required medical benefits, employers’ liability coverage is subject to specific dollar limits. While employers can choose their desired level of protection, most states mandate minimum statutory limits that these policies must satisfy.

The table below outlines the key differences between workers’ compensation (a.k.a. Part One or Coverage A) and employers’ liability coverage (a.k.a Part Two or Coverage B).

Workers’ Compensation vs. Employers’ Liability Insurance

	Part One (Workers’ Comp)	Part Two (Employers’ Liability)
Legally Required?	Yes, in most cases	No
Who It Covers	Injured employees	Employers facing lawsuits
Covered Costs	Medical, rehab, lost wages	Defense, settlements, judgements
Legal Standard	Applies regardless of fault	Employers must be found liable
Policy Limits	Statutory	Subject to state-mandated minimums

Workers’ Compensation Insurance Exclusions

Workers’ compensation policies outline very specifically who and what is covered by the policy. This section outlines who and what is not covered by the policy.

Certain Individuals

Sole proprietors, partners, volunteers, independent contractors, longshoremen, railroad employees, and federal employees are generally not covered by standard state workers’ compensation policies. While corporate officers are also business owners, they are typically considered employees and included in coverage by default unless they specifically choose to opt out.

In many states, business owners and sole proprietors are exempt from workers’ compensation requirements until they hire their first employee. However, there are significant exceptions for certain industries; for instance, in states like Florida and California, sole proprietors in construction or high-risk trades are often required to carry coverage for themselves even if they have no employees. Additionally, while volunteers are often excluded, many states allow businesses to voluntarily include them or may mandate coverage for specific roles like volunteer firefighters.

Additionally, federal employees, railroad employees, and longshoremen fall into different categories of workers that use different systems to provide injury benefits and protection. Federal employees are covered through the Federal Employees’ Compensation Act. Railroad workers and longshoremen also have unique programs and laws that dictate how they receive coverage that is different from standard workers’ compensation policies.

Specific Types of Injuries

As discussed above, workers’ compensation policies are only meant to cover injuries and illnesses that occur at, or result from, employment with the insured company. Injuries that occur outside of work would instead be covered by a separate disability insurance policy. This means that the following types of injuries are not covered by workers’ compensation coverage:

• Injuries that occur outside of the workplace or line of duty
• Injuries that occur while commuting to and from work
• Injuries due to substance abuse or intoxication
• Intentional injuries

Specific Types of Expenses

Workers’ compensation coverage is intended to only compensate for the costs of medical expenses, lost wages, vocational training, death benefits, and employers’ liability. While other types of expenses may be covered in unique circumstances, costs falling outside of these categories will usually not be covered. Such uncovered costs might include wages for a replacement worker or fees and penalties imposed by the Occupational Safety and Health Administration (OSHA). Businesses will have to cover those costs themselves.

Understanding Exclusions

Every workers’ compensation policy will list explicit exclusions, or things that the policy does not cover. These exclusions define certain types of workers, injuries, and expenses that fall outside of the policy’s coverage. Generally, these exclusions will match what we’ve described above—that specific types of workers and injuries occurring outside of normal work procedures are not covered by the policy. However, sometimes policies will include a list of exclusions that define additional items (types of workers, injuries, or scenarios) that fall outside of coverage. It is important to read through the policy to understand both what will, and will not, be covered.

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Workers’ Compensation Insurance Costs

Determining the overall expenses associated with a workers’ compensation policy involves considering more than just the premiums. Buyers must also factor in deductible payments and the indirect costs associated with workplace injuries if unfortunate incidents arise. It comes as no surprise that minimizing workers’ compensation costs requires a two-pronged approach: selecting an affordable policy and actively cultivating a safe work environment to prevent claims.

While policy premiums represent a significant portion of the expense, it’s crucial to account for deductible payments. Deductibles are the amounts the policyholder is responsible for reimbursing to the insurer after a claim is filed. Unlike other types of insurance, workers’ comp insurers typically pay the full cost of a claim upfront to ensure no delay in employee care and then bill the employer for their share up to the deductible limit. Opting for higher deductibles can result in lower premiums, but it means assuming a greater share of the financial burden in the event of a claim.

Moreover, the total cost of claims must be taken into consideration. This includes direct losses—such as medical treatments, rehabilitation, and wage replacement—as well as the administrative costs of handling claims, which include expenses related to investigations and legal proceedings. By prioritizing safety measures and implementing thorough risk management practices, businesses can minimize the likelihood of workplace accidents, injuries, and subsequent claims. Maintaining a safe work environment not only safeguards employees but also reduces the financial impact of workers’ compensation insurance.

How Much Does Workers’ Compensation Insurance Cost?

According to the Bureau of Labor Statistics (BLS), workers’ compensation insurance expenses are relatively modest compared to other employee benefits. In aggregate, these additional costs of employment that employers face are known as labor burden.

In December 2025, employers nationally paid an average of $0.46 per hour worked for expenses related to workers’ comp coverage. This figure translates to approximately 0.9% of total compensation (including benefits) or 1.4% of wage and salary payments.

To illustrate the potential costs, let’s consider a hypothetical scenario involving a small business with 10 covered employees, each earning an annual salary of $50,000. In this case, the business could anticipate an approximate annual expenditure of $7,000 related to workers’ compensation insurance.

To provide further context, the table below showcases the total employer costs per hour worked for various common employee benefits. With workers’ compensation insurance expenses amounting to just $0.46 per hour worked, they represent roughly one-eighth of employer health insurance costs and about one-fourth of paid vacation benefits.

Benefit	Employer Cost (per hour worked)
Workers’ compensation	$0.46
Paid vacation leave	$1.76
Paid sick leave	$0.60
Overtime and premium pay	$0.42
Health insurance	$3.84
Short-term disability insurance	$0.09
Retirement benefits	$2.52
Social Security and Medicare	$2.75

Keep in mind, the data here represents U.S. averages across all occupations and business types. Exactly how much insurance will cost your firm depends on several factors, the most important of which are outlined below.

Factors That Affect Workers’ Comp Rates

• Annual payroll: Your total annual payroll is a significant factor in determining the cost of a policy because it serves as the primary measure of your business’s overall risk exposure. Generally, as your payroll grows, you can expect to pay more for coverage. While higher wages can lead to larger indemnity (lost wage) claims, these benefits are typically capped by state law at a percentage of the worker’s average weekly wage and do not affect the medical portion of a claim.
• Location: Workers’ compensation insurance rates vary by location due to differences in state laws and market conditions. For example, states with more generous benefits often have higher workers’ compensation rates to cover the higher costs. Similarly, states with higher medical costs also often have more expensive workers’ compensation policies.
• Industry and occupation: Different industries and occupations have different levels of risk associated with workplace injuries. For example, businesses that employ construction or manufacturing workers will face higher workers’ comp rates compared to firms that employ office-based workers.
• Claims history: Businesses with a history of workers’ compensation claims, especially severe or frequent ones, will likely have to pay more for coverage. Insurance companies consider your claims history as an indicator of risk.
• Safety measures: Implementing safety provisions and risk management practices can help lower your workers’ compensation costs both directly and indirectly. Insurers often offer lower rates to businesses with strong safety measures in place. At the same time, businesses that prioritize safety will be less likely to experience an expensive claim.
• Deductible: Employers will sometimes have the option to set a higher or lower deductible payment, which will raise or lower the regular premiums. There is an inverse relationship between the monthly premium and the deductible. That is, when the monthly premium is higher, the deductible is lower, and vice versa. By paying more every month in premiums, the employer could pay less towards a claim in the form of a deductible. On the other hand, choosing a policy with low premiums might mean a higher deductible payment down the line.

Workers’ Compensation Rates by Industry

Industry	Cost per Hour Worked	Percentage of Wages	Percentage of Total Compensation
Construction	$1.31	3.7%	2.6%
Education and health	$0.37	1.0%	0.7%
Finance	$0.23	0.5%	0.4%
Information	$0.39	0.7%	0.5%
Leisure and hospitality	$0.26	1.5%	1.2%
Manufacturing	$0.55	1.7%	1.1%
Professional and business	$0.39	0.9%	0.7%
Trade, transportation, and utilities	$0.58	2.1%	1.5%
All private industry workers	$0.42	1.3%	0.9%

Workers’ Compensation Rates by Occupation

Occupation	Cost per Hour Worked	Percentage of Wages	Percentage of Total Compensation
Management	$0.34	0.7%	0.4%
Construction and maintenance	$1.11	3.4%	2.3%
Production and material moving	$0.74	3.0%	2.0%
Sales and office	$0.26	1.0%	0.7%
Service	$0.40	2.1%	1.5%
All occupations	$0.45	1.3%	0.9%

Frequently Asked Questions

Detailed Methodology: How We Compare Workers’ Compensation Insurance Carriers

Detailed Methodology: How We Compare Workers’ Compensation Insurance Carriers

The process of selecting workers’ compensation coverage can be difficult. Many companies offer policies, but they don’t always make it easy to understand the details of their coverage options and pricing. To help you find the best policy, our research team evaluated all of the top national carriers. We considered their coverage options, pricing, discounts, industry specializations, financial strength, and lastly, reputation to create our list of the best workers’ compensation insurance companies. Each factor is explained in more detail below.

• Company reputation: To evaluate each company’s reputation we compiled data from multiple sources, including the National Association of Insurance Commissioners, Better Business Bureau, J.D. Power, and a handful of other sources for online company reviews. In evaluating customer feedback and complaints, we focused specifically on customers’ satisfaction with claims handling and the value they received from their policies.
• Coverage: State laws largely dictate coverage provided by standard workers’ comp policies; however, policies can differ in the availability of “other states” coverage and the flexibility of employers’ liability limits. We favored companies that offer broad “other states” benefits and higher optional limits for employers’ liability to ensure comprehensive protection for businesses operating across multiple jurisdictions.
• Pricing options & discounts: While workers’ compensation rates largely depend on location and the specifics of the business covered, some insurers offer a variety of discounts for companies with a strong track record of safety. Another option that can help reduce the burden of workers’ comp premium payments is choosing a pay-as-you-go payment plan. Carriers that offered the best discounts and pay-as-you-go policies were ranked highest.
• Industry specialization: Because not every carrier will offer workers’ compensation coverage for high-risk industries like construction or manufacturing, it can be hard for employers in these industries to find coverage. For this reason, we included a few insurance companies that do offer coverage for industries more prone to accidents.
• Financial strength: Financial strength, and thus, ability to pay claims is another important factor when comparing insurance providers. We evaluated ratings from AM Best, Moody’s, and S&P.

References

1. Better Business Bureau. https://www.bbb.org/.
2. J.D. Power. https://www.jdpower.com/.
3. AM Best. https://web.ambest.com/home.
4. Moody’s Ratings. https://www.moodys.com/.
5. S&P Global Ratings. https://www.spglobal.com/ratings/en.
6. National Safety Council. Work Injury Costs. https://injuryfacts.nsc.org/work/costs/work-injury-costs/.
7. National Academy of Social Insurance. https://www.nasi.org/.
8. National Association of Insurance Commissioners. https://content.naic.org/.
9. IRMI. Competitive State Funds. https://www.irmi.com/term/insurance-definitions/competitive-state-funds.
10. Department of Labor. Federal Employees’ Compensation Act (FECA) Claims Administration. https://www.dol.gov/agencies/owcp/FECA/about.
11. U.S. Bureau of Labor Statistics. Employer Costs for Employee Compensation. https://www.bls.gov/ecec/.
12. Nationwide. Nationwide Workers’ Compensation. https://www.nationwide.com/business/insurance/workers-compensation/.
13. The Hartford. Workers’ Compensation Insurance. https://www.thehartford.com/workers-compensation.
14. Progressive. Workers’ Compensation Insurance. https://www.progressivecommercial.com/business-insurance/workers-compensation-insurance/.
15. ERGO Next Insurance. Workers’ Compensation Insurance. https://www.nextinsurance.com/workers-compensation-insurance/.
16. Hiscox. Workers’ Compensation Insurance. https://www.hiscox.com/small-business-insurance/workers-compensation-insurance.
17. ADP. Workers’ Compensation Insurance for Small Businesses. https://www.adp.com/what-we-offer/benefits/business-insurance/workers-compensation.aspx.
18. Travelers. Workers’ Compensation Insurance. https://www.travelers.com/business-insurance/workers-compensation.