Workers’ compensation insurance (also known as workers’ comp or workman’s comp insurance) is coverage that compensates employees of an insured company when they are injured due to work. This guide will cover the basics of workers’ compensation insurance, including how it works, what it covers, costs, and requirements. This guide will help companies analyze the top providers and evaluate what makes each stand out.
Before getting into the details, here is a short preview of our top picks for the best workers’ compensation insurance companies:
|Best Company For||Runner-Up||Best Overall||Best for Small Business|
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*These links will take you to one of our insurance partners. The companies listed here may or may not be available at this time.
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Understanding Workers’ Compensation Coverage
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?
Workers’ compensation is a type of insurance that, in the event of an injury to an employee during the course of work, provides wage replacement and medical benefits to the employee in exchange for the mandatory relinquishment of the employee’s right to sue the employer for negligence relating to the injury.
Workers’ compensation is sometimes referred to as workman’s compensation, workers’ comp, and workers’ compensation insurance. All of these terms refer to the same thing: coverage related to employees getting sick or hurt at work.
This insurance is a trade-off that is intended to help the employee, the employer, and society as a whole. The employee is guaranteed coverage in the event that he or she must miss work as a result of sickness or injury. The employer is protected from potentially costly and time-consuming litigation. And society benefits from keeping workers’ comp cases out of the courtrooms, freeing up capacity for legal disputes that can’t be settled out of court.
Workers’ compensation coverage is required, in some capacity, in every state except Texas. While most states require all employers to carry workers’ compensation insurance, some only require employers over a specific number of employees to carry coverage. For example, both Missouri and Alabama only require employers with five or more employees to carry a workers’ compensation policy. However, several states, including Missouri and Alabama, have exceptions that require construction businesses to maintain workers’ comp insurance regardless of size.
Employers should search for their state’s Department of Labor website and find out the specific requirements around workers’ compensation that apply to their business. In certain states that require companies to have worker’s compensation insurance, not having it is considered a criminal offense that can result in fines, imprisonment, or time in county jail.
Workers’ compensation insurance will provide benefits to an employee who is injured or sick as a result of work. The injury or illness may or may not occur in the place of work, but must be related to the work. Repetitive stress injuries, injuries resulting from workplace violence, and even stress-related mental injuries such as post-traumatic stress disorder (PTSD) have been covered by workers’ comp policies. This section provides a look at some of the types of injuries and illnesses workers’ comp may cover and what one can expect their workers’ comp coverage to provide when eligible.
Who Is Covered?
All employees of an insured company, whether full-time, part-time, or seasonal, are covered under the employer’s workers’ compensation policy. However, business owners, partners of the business, and contractors are not usually covered by the workers’ compensation policy by default.
What Is Covered?
Workers’ compensation policies only cover injuries or illnesses that occur at, or result from, work. The injury or illness may or may not have an obvious inception and may be a cumulative or repetitive injury such as carpal tunnel syndrome or headaches. Workers’ compensation insurance will also cover injuries or illnesses that are psychological in nature like post-traumatic stress disorder.
Here are some common types of injuries and illnesses that can be covered by workers’ comp:
|Hearing loss||Skin disease|
|Carpal tunnel syndrome||Post traumatic stress disorder|
Workers’ compensation policies can cover medical expenses, lost wages, vocational rehabilitation, and burial/funeral costs in the event of a death. Here is a more in-depth look at the four main types of benefits a typical workers’ comp policy provides:
The policy will cover costs related to treatment for injuries or illnesses. These typically include hospital and doctor visits, nursing care, medications, physical therapy, and medical equipment such as crutches and wheelchairs. Some state laws may impose maximum limits on certain types of treatment or care. For example, chiropractic visits may be capped at 24 total visits. If a less traditional sort of treatment is sought, the employee should check their policy, as what is covered varies from state to state (massage therapy, etc.).
Disability Benefits & Types
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, the impact it has on an employee’s ability to work, there are four different types of disability benefits available.
1. Temporary Total Disability
This is the kind of disability pay that may be available 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, 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.
2. Temporary Partial Disability
This is the kind of disability pay that may be 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 breaks a finger 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 be paid an amount that is somewhere in between the wage for the new, lesser role and their role before the injury.
3. Permanent Total Disability
This is the kind of disability pay that may be available when a worker is entirely unable to continue earning in the same line of work as a result of a lasting injury or illness. For example, a worker who loses an arm and who then will not be able to weld or operate heavy machinery safely for a living anymore may recover permanent total disability benefits.
Typically, a worker can expect these benefits to be 66.67% of their average weekly wage until death or retirement, depending on state laws.
4. Permanent Partial Disability
This is the kind of disability pay that may be available when a worker is permanently prevented from earning as much as before as a result of a work-related injury or illness. For example, a worker who loses their hearing may have a more difficult time working and may recover permanent partial disability benefits. The factors that determine the amount that will be paid include the extent of the injury, loss of wages, and future earning capacity. Some states may have specific laws that specify partial disability benefits for different injuries.
The table below summarizes the different types of disability benefits, when they apply, and what coverage should be expected in each case:
|Disability Type||Injury/Illness Description||Example||Coverage*|
|Temporary Total||Temporary disability; full recovery|
Cannot work during recovery
|A welder injures his eyes, needs surgery, and can’t see properly during the recovery. He makes a full recovery and returns to work after a few weeks.||Employees receive 66.67% of their average weekly income, subject to minimum and maximum limits.|
|Temporary Partial||Temporary disability; full recovery|
Can work in a limited capacity during recovery
|A secretary breaks her finger and can’t use it during her recovery, but her work may be limited to activities she can do during that time.||Employees receive a lesser amount earned in the new role, plus 66.67% of the difference between the new role’s wage and the usual wage for a week’s worth of work.|
|Permanent Total||Permanent disability|
Cannot work in same capacity ever again
|An industrial worker loses his arm at work. He may be able to do some type of work again, but never the same work as before.||Employees receive 66.67% of their average weekly income until death or retirement.|
|Permanent Partial||Permanent disability|
Cannot perform same work as well or as easily anymore
|An employee loses her sight in one eye after an explosion at work. She will be able to return to work, but will never perform at the same level as before.||Employees receive an amount deemed sufficient for the loss of sight in one eye, determined on a case-by-case basis according to relevant factors; or, in a state with a permanent partial scheduled disability, the employee will receive the predetermined amount for the loss of sight in one eye.|
*This is the typical coverage that may be expected, but coverage varies by state, year, type of injury, and policy.
Most workers recover from injuries and illnesses that occur at, or stem from, work. Temporary disability (TD) benefits may be available during recovery, and permanent disability (PD) benefits may be available for lasting effects of injuries or illnesses whether the worker returns to work or not. Whether someone is unable to work during recovery or whether someone’s future earning potential is impacted by their injury or illness is determined by a physician, and the exact amount of money to be paid in any circumstance may depend on which state’s laws govern the claim.
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 about $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 available within the statutory period, usually 30 or 60 days from the time that it is confirmed that there is a 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.
While the eligibility and amounts of obtainable benefits vary by state, total and partial dependents of a deceased worker may receive death benefits through workers’ compensation insurance if the death resulted from a work-related injury or illness.
Dependents are those who, at the time of the injury, relied upon the worker for financial support. Additionally, to be considered a dependent, you must typically have either lived in the same household as the worker or be a close relative. Here is a list of those who might be eligible for death benefits as either total or partial dependents:
- Children (including stepchildren or adopted children)
- Parents (including in-laws)
- Siblings (including in-laws)
- Nieces and nephews
- Aunts and uncles
Total vs. Partial Dependency
The distinction between a total and partial dependency may impact the extent of the potential benefit available. Total dependents are those who are totally dependent upon the deceased. Here is a list of those who might be considered a total dependent categorically, by law:
- Minor children
- A surviving spouse who earns less than the statutory maximum amount of money
- Adult children who cannot work because of either mental or physical incapacitation
If a potential dependent isn’t automatically considered a total dependent, he or she may provide the necessary evidence in their state to show dependence. Examples of those who might be deemed total dependents based on the facts of their respective cases, but not by law, include spouses who earn more than the statutory maximum amount of money and parents who lived with and relied upon the deceased for their living expenses.
Partial dependents are those who were less than completely dependent upon the deceased. Here is a list of those who might be considered a partial dependent:
- A surviving spouse who earns more than the statutory maximum amount of money
- A parent in a retirement home
- Family members who relied on the deceased for some financial support
Certain state’s laws might dictate that there will be no eligible partial dependents if there is more than one total dependent of the deceased.
How Much Do Death Benefits Pay?
Death benefits typically pay in weekly installments with weekly maximums and a total benefits maximum. States vary in how the weekly minimums and maximums are determined and how the benefits are calculated altogether.
For example, in California, one total dependent will receive weekly installments, at the total temporary disability benefits rate, with a maximum of $250,000 paid out, plus $10,000 for burial expenses. No less than $224 will be paid per week. The benefits maximum raises to $290,000 for two total dependents and to $320,000 for three or more. California has other very specific payout calculations based on the number of total and partial dependents receiving benefits.
In Colorado, installments are paid at the same rate as in California (66.67% of the deceased worker’s weekly salary), but the maximum amount available is set by law each year. The Colorado Director of Workers’ Compensation determines how much each dependent receives based on their reliance on the worker, proportionately. The rest of Colorado’s laws for disbursement are rather specific and depend significantly on the dependent’s relationship to the deceased. Reference Colorado state’s website for more information.
Finally, in Wisconsin, the maximum benefit available equals four years of the deceased worker’s annual salary.
Be sure to research your state’s workers’ compensation laws in order to know how death benefits payout in your jurisdiction.
What Is Not Covered by Workers’ Compensation Insurance
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.
Business owners, sole proprietors, volunteers, independent contractors, longshoremen, railroad employees, and federal employees are not covered by standard workers’ compensation policies.
In most states, business owners and sole proprietors are exempt from workers’ compensation policy requirements until they have employees. However, business owners and sole proprietors usually can still choose to purchase a policy and carry coverage if their state allows it.
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 Employee’s 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 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, and, in the worst cases, death-related expenses. 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.
Every worker’s 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 procedure 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.
How Workers’ Compensation Policies Work
An employer will either be required to have workers’ compensation insurance, or it won’t. Requirements and procedures vary by state. For companies required by their state to carry coverage, this is how workers’ compensation insurance generally works:
A company will usually purchase a workers’ compensation policy from an insurance company, like Progressive or Nationwide, and pay a monthly premium to retain the policy. Most insurance companies offer a variety of policies with different coverage options and policy limits. In the event of a claim (an employee is hurt or falls ill at work), the insured will usually pay a deductible, and the insurer will offer to resolve the claim by covering costs as outlined in the insurance policy. The employee might refuse the offer and hire an attorney in an attempt to get more for their injury. In this case, the insurer will work to either settle the claim or go to trial if necessary.
For reference, here are definitions of some key terms, important to understanding how this insurance works:
- Coverage – the types of incidents, damages, and expenses that will be covered
- Policy Limit – the maximum amount of money that the insurer can be required to pay on the policy
- Premium – the cost of retaining the policy, usually paid monthly or annually by the company
- Deductible – the out-of-pocket amount that the company must pay toward a claim before coverage becomes available
- Claim – a request by the policyholder to the insurance company to provide compensation for a covered incident or loss
Most insurance companies will offer a similar set of coverage options. However, policy limits, premiums, and deductibles can vary greatly between insurers and will depend on every company’s unique situation.
With regards to workers’ compensation insurance, employees receive the following benefits:
- Medical benefits
- Vocational rehabilitation
- Death benefits
If an employee experiences a work-related injury or illness, and the injury or illness is not entirely the person’s fault, the employee will likely be entitled to compensation from the employer. If the employer carries a workers’ compensation policy, the employee will be eligible to file a claim for workers’ compensation. If the employer does not carry workers’ compensation coverage, the employee may request compensation for lost wages and medical expenses directly from the company and can take legal action if the company refuses.
In the event that workers’ compensation insurance is in place, the employee should notify the employer as soon as possible if he or she believes that the injury or illness is related to work. The employee will be required to fill out a workers’ compensation claim form that their employer provides and then sends to the insurer.
Treatment will be authorized by the claims administrator within the statutory period, which may vary by state. For example, in California, the claims administrator should authorize medical treatment within one working day after the claim is filed. And in California, an employee is limited to $10,000 total in medical costs during the time the claim is being investigated. Once the claim is settled, the employee will receive the necessary medical benefits that are available under the policy for as long as necessary. States may vary with regard to certain maximums of specific types of treatment, such as physical therapy visits or chiropractic visits.
Employees have the option to accept the insurer’s offer once a claim has been processed but may also retain an attorney in order to pursue a monetary lump-sum settlement or even a restructured workers’ compensation settlement.
To receive benefits, a worker must be classified as an employee as opposed to an independent contractor. Employees are automatically covered when working for an employer that carries workers’ compensation. With regard to contractors, companies often require their independent contractors to carry general liability insurance as a way to disclaim liability for work-related injuries or illnesses incurred by non-employees. Regardless of worker classification, whether any such disclaimer in the employment/contractor agreement will be legally enforceable, or whether the worker can sue for compensation, isn’t always clear and is usually determined on a case-by-case basis.
Finally, an employee should be ready to get back to work once capable. Disability benefits may be available to the employee during recovery, whether the employee is working during recovery or not. Permanent injuries that change the type or amount of work the employee can do, thus altering earning potential, may render the employee eligible for vocational rehabilitation benefits as well. If the employee dies as a result of illness or injury, the employee’s dependents may be eligible for death benefits under the policy.
Employers who have active workers’ comp policies receive the following benefits in exchange for their premiums:
- Coverage for costs beyond the deductible for covered claims
- Protection from lawsuits filed by employees
An employer that carries workers’ compensation insurance needs to inform its employees about the insurance upon hiring and also keep a poster with coverage information up in a place the employees can see it during working hours.
Once an employee notifies the employer of an injury or illness, the workers’ compensation claim form, available through the insurer, must be provided to the employee. The employee will also be given a receipt of submittal, and the employer will forward the claim to the claims administrator.
Many states mandate that an employer must keep a specified amount of money to be available for appropriate medical treatment while the claim is being investigated. Employers might also be expected to make available to the employee some level of work during the investigation period. Lastly, in almost all states, employers are not allowed to fire or refuse to hire employees or job candidates on the basis of prior workers’ compensation claims.
Carrying workers’ compensation insurance is not only necessary in most cases to be in compliance with state law, it serves the practical purpose of protecting the employer from potentially costly and time-consuming litigation. Further, it pays the employee’s medical costs and lost wages after injury and limits the employer’s out-of-pocket cost to just the deductible and the monthly premiums unless the employer was reckless or acted intentionally in bringing about the harm to the employee.
Receiving Money From a Claim
The money that beneficiaries receive in an insurance claim comes from the insurer. Insured employers will pay monthly premiums in order to retain insurance coverage. In the event of a claim, the insured may be required to pay a deductible to the insurer in order to activate the coverage for the claim. The insurer is typically required by law to maintain the necessary funds to cover its policies.
Most of the time, workers’ compensation insurance is provided by insurance companies, like Nationwide or Progressive. Some states have state funds available for state employees, while others operate a completely state-owned workers’ compensation fund that all companies must provide coverage through. In states where employers have the option to acquire insurance from the state, the state is typically considered an insurer of last resort. However, some state-run systems offer very competitive options. They also often guarantee small businesses that may not be able to afford private insurance access to workers’ compensation insurance. Only four states (Ohio, North Dakota, Washington, and Wyoming) require employers to purchase insurance from their designated programs.
In all cases, employees receive their medical benefits and wage replacement, if they qualify for it, in a timely fashion. If funds are not available in time, the employee is reimbursed for covered expenses.
As stated earlier, an injured employee has the option to accept the insurer’s offer once a workers’ compensation claim has been processed, or the employee may retain an attorney in order to pursue a monetary lump-sum settlement or a restructured workers’ compensation settlement. If the employee refuses the offer and fails to reach a settlement upon negotiations with the workers’ compensation insurance company, the employee and their attorney may decide to go to trial.
At this time, the employee and the attorney will work together to calculate what the employee feels the payout should be and pursue that from the insurance company instead of the original offer. These are some of the key factors an employee and attorney will consider when making that calculation:
- Medical costs – for illness or injury, including hospital treatment, doctor visits, nursing care, medications, medical equipment, and therapy
- Likelihood of future treatment – in the event that the claim is resolved before recovery is complete
- Disability – may be temporary or permanent
- Attorney’s fee – in the event that an attorney is retained
- Relevant workers’ comp laws and restrictions – certain maximums and restrictions vary by state
These are typically the same factors the insurance company will use in making its calculation. The dispute is usually over the compensation amount, which doctors can be seen, and what treatment methods will be approved.
The two sides will negotiate until an agreement is reached. If no agreement is reached, the employee may file a lawsuit to have a judge resolve the dispute. It is often in the best interest of both sides to resolve the dispute at the negotiation level, as trials are costly, time-consuming, and unpredictable.
Workers’ Compensation Insurance Costs
To really understand the costs of a worker’s compensation plan, buyers need to understand how the policy is structured. Remember that a workers’ compensation policy requires the employer to pay a monthly premium and an out-of-pocket deductible when a claim is filed. 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, the employer will pay less toward a claim via the deductible when an incident does occur. This encourages companies to maintain safe work procedures, as they can save significantly on workers’ compensation insurance by pairing a lower premium with a high deductible and limiting the number of workplace injuries.
How Much Does Workers’ Compensation Insurance Cost?
Understanding how the premiums and deductible are related, buyers can start to consider how much the monthly premiums will cost them. Typically, the premium is the bulk of the cost of the insurance; although, deductible payments can add up if the number of claims is high.
Depending on a number of factors, the cost of a workers’ compensation policy is approximately $1-2 for every $100 of covered payroll. Considering this, a small business that has 10 covered employees, each making $50,000 per year can expect to pay between $5,000 and $10,000 annually on workers’ compensation insurance. Large companies could pay significantly more, however, based on their annual payroll numbers. According to data from the BLS, workers’ compensation insurance is a relatively small expense compared to other employee benefits. Nationally, workers’ comp costs employers approximately $0.46 per hour worked in 2021.
Factors That Affect the Cost of Coverage
To better approximate the cost, it’s helpful to understand all of the factors that determine the cost of the policy. The factors that an insurer will consider include:
- Annual payroll – the wages of injured employees are a key factor in determining their payout on a claim, so this is an important figure for the insurers to consider in determining the cost of the policy.
- Location – the laws in each state vary and must be considered in the cost of the policy.
- Industry and occupation – employees in certain jobs are at a higher risk of injury than others. The most risky industry is, in fact, construction, making it the most expensive industry to cover. On the other hand, design, finance, and IT are among the least risky, and will be subject to lower premiums.
- Risk profile and claim history – companies that have a history of frequent workers’ compensation claims will probably have to pay higher premiums to maintain their policies.
Finding the Best Workers’ Compensation Insurance Policy
The process of selecting an insurer and policy for workers’ compensation coverage can be difficult. Many companies offer policies, and they don’t always make it very easy to understand the details of coverage and pricing. Fortunately, well-informed employers can simplify the process by knowing the coverage they need and knowing where to find it.
How to Buy: Broker, Agent, or Online
There are three main ways that employers can purchase workers’ compensation policies for their company: through an insurance broker, through an insurance agent, or online. Each method has its pros and cons.
Insurance brokers are individuals or companies that have relationships with multiple workers’ comp insurance companies and have the knowledge to match employers to the workers’ compensation policy that most fits their needs.
The pros of shopping for a policy through a broker is that the broker will be very experienced and knowledgeable about workers’ compensation insurance and will also know specifics about multiple companies and their policies. Working with a broker can be a great option for employers who would rather not spend a lot of time learning about their options and comparing different policies from multiple companies.
The downside of buying through a broker is that the broker is essentially a middleman between the employer and the insurer. Sometimes, brokers can offer good deals to companies because they have special relationships with insurance companies and can offer pricing that is unavailable on the open market. However, it can be more expensive to buy through a broker because of the fees brokers collect when signing a company up for a new policy. To many companies, the additional cost is worth the streamlined buying process and peace of mind, knowing they are getting the best combination of coverage and pricing available between the several companies their broker represents.
Insurance agents are knowledgeable representatives of a specific insurance company. They work for a single insurer, and they know the details of the different workers’ compensation policies their company offers. They are usually well versed in the coverage options, policy limits, exclusions, and premiums and can provide price quotes to employers looking to buy.
Buying through an agent is a great option for employers who are deciding between just a couple of companies, or if they already know which company they want to buy from, but need more information about coverage options before choosing a policy. If those buying on behalf of the employer has done a fair amount of research, they should be able to narrow down the options to just two or three companies and work with representatives from each to get quotes.
The final option, recommended for only the most experienced and well researched buyers, is to buy online without the help of an agent or a broker. By reading guides like this one, buyers should be able to determine the coverage that applies to their business and estimate their costs. Armed with this information, they can find the top companies that fit their needs and begin to sign up for the policy they want from the insurer’s website. Usually, the insurer will finalize the purchase over the phone, but most of the work can be done online for buyers who know what they want.
Comparing Workers’ Compensation Insurance Companies
To choose a workers’ compensation company, buyers should consider several factors about each company, all of which are detailed below.
Most providers will offer very similar basic coverage options. Usually policies will include coverage for accidental injury or illness caused by, or exacerbated by, employment with the company. They will exclude injuries that were intentional or outside of work-related activities. Usually, the terms of the policy depend somewhat on state law. Different insurance companies may only do business in select states, so it is imperative to find a company that provides coverage in every state in which your business operates.
While coverage options should be fairly similar in a given state, the pricing of that coverage may vary more significantly. Usually, the more transparent a company is about their pricing, the more likely they are to give a better price.
The price of the policy (reflected in the monthly premium payments) always depends on the employer’s location, industry, experience/claim history, and annual payroll. Some insurers will put a higher emphasis on the industry, raising premiums more for higher risk industries than other insurers. For this reason, employers might benefit from seeking out an insurance provider that has some level of specialization in their industry, which is the next factor to consider when seeking a policy.
Construction is a higher risk industry to insure because of the high-risk equipment involved and the physical nature of construction work. Because of this, some insurers do not even offer workers’ compensation policies for construction businesses, making the task of finding a provider even more challenging.
Regardless of the industry an employer is in, they can benefit from finding a provider with a workers’ compensation provider with experience in their field. These insurance providers will understand the nuance involved in the industry and be able to answer complex questions about how policies affect these businesses.
Financial strength, and thus, ability to pay claims is another important factor when comparing insurance providers. To get a sense of financial strength of an insurer, it is useful to reference ratings provided by the major credit rating agencies, such as AM Best, Moody’s, and S&P. Most of the well-known insurance companies are rated highly by these agencies. However, smaller, local insurance companies may not be rated at all. Of course, a smaller insurance company may still be financially secure and face no risk of being unable to pay claims, but it becomes more difficult to establish their financial strength. Typically, companies that have been in business for many years have a higher likelihood of staying in business and being financially secure.
The last, but certainly not least, thing to consider about a workers’ compensation insurance company is their reputation. In the modern era, it’s very easy for anyone to look up information about a company, including the reputation that company has with its customers. Two of the most authoritative sources of information related to insurance company reputation are J.D. Power and the Better Business Bureau.
J.D. Power provides annually updated and aggregated satisfaction ratings by customers of major insurance companies. They use these ratings to give customers insight about the insurance companies’ products, practices, and reputation.
The Better Business Bureau offers a platform for customers to share their complaints about companies. Businesses always have the opportunity to reply and remedy any issues that their customers submit to the BBB, and their responses are publicly available to anyone. This is a great place to see how a potential provider handles complaints and issues with customers, and to assess the general integrity of that company.
The Best Workers’ Compensation Insurance Companies
The Hartford Workers’ Comp (Best Overall)
The Hartford is a Connecticut-based insurer that has been in continuous operation since 1810. Today, The Hartford is one of the largest providers of small business insurance operating in the U.S.
- Standard coverages are more comprehensive than many competitors’
- Pay-as-you-go pricing and discount opportunities mean fair, accurate premium payments
- Strong track record and company reputation
- Relatively low ratings in some recent customer satisfaction studies
- No industry specialization in construction
The Hartford serves more than 1 million commercial 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 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, The Hartford scored an 819 out of 1,000 for customer satisfaction, which was below average in the category.
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.
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.
The Hartford does not specialize in construction or any industry in particular when it comes to workers’ compensation insurance. However, The Hartford has extensive background covering businesses in every industry through their strong commercial insurance offerings, and with more than two centuries of experience, The Hartford has probably encountered most situations or unique circumstances that could arise. This background and experience makes The Hartford a reliable provider for companies in any industry.
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 A.M. Best rating The Hartford an A+, Moody’s awarding it an A1, and S&P offering an A+, all of which are 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.
With so many positive aspects about The Hartford to factor in, we recommend The Hartford as the Best Overall Workers’ Compensation Provider. Their centuries of experience, unique benefits, great reputation, and excellent financial strength make them an easy choice as our top pick in workers’ compensation.
Progressive (Best Workers’ Comp Insurance for Small Business)
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 for many other forms of small business insurance, including workers’ comp.
- Progressive Advantage program allows for competitive pricing and access to other forms of commercial coverage
- Offers a package of policies specifically tailored for contractors
- Good financial strength and customer reputation
- Progressive does not directly underwrite workers’ comp policies, so may coordinate with additional carriers
- Workers’ comp coverage not available in every state
Progressive has a strong reputation fitting its place as one of the largest and most prominent insurers in the U.S. Progressive was not listed in the most recent J.D. Power Small Commercial Insurance Study, but it has earned an A+ rating with the Better Business Bureau, which suggests that Progressive will be a trustworthy and reliable partner to your business. Progressive also provides some of the most informative online resources for people looking to learn more about workers’ compensation policies, costs, and price quotes.
Progressive has a fairly unique program called the Progressive Advantage Business Program to help small businesses get the insurance coverage they need. Under the Progressive Advantage program, Progressive will connect you to third-party insurers for certain forms of commercial insurance coverage, which can include workers’ compensation in many cases. This allows you to secure other small business coverages that you might need with Progressive even if they cannot underwrite your workers’ compensation policy (or another form of coverage) directly. The benefit of this is that you can easily link and bundle various commercial policies through Progressive, which can save you money and give you access to some of Progressive’s industry leading coverages like commercial truck and commercial auto. The downside, however, is that you may need to keep track of different terms and requirements through any separate carriers.
Note that if your business operates in Ohio, North Dakota, Washington or Wyoming, Progressive does not offer workers’ compensation coverage in your state.
Because of the Progressive Advantage program, users can find excellent prices through Progressive. Progressive’s website notes that the nationwide average monthly cost for workers’ compensation through Progressive Advantage is around $86, though like any workers’ comp policy, your actual costs will depend on factors like your state, payroll, and claims history.
Customers can start a quote on Progressive’s website or speak to an agent for specific pricing information. After filling out a form with some information about your company, Progressive will show you several options, along with premiums and deductibles, to help you find the right coverage for your business’s needs and budget.
Progressive has an extensive list of coverage types that may be required for different industries and professions, demonstrating their expertise in a variety of small business industries. Progressive’s customers can be assured that whether directly through Progressive or its partner carriers, they will be able to secure exactly the right types and levels of coverage for their industry. And for contractors and construction professionals specifically, Progressive has a contractors’ insurance package with coverages available through the Progressive Advantage Business Program.
Progressive is one of the most financially secure insurers in the market, earning an A+ rating from A.M. Best, AA from S&P, and Aa from Moody’s. All of these marks indicate that the rating agencies believe Progressive is a financially strong company with low risk.
Progressive is an excellent option for workers’ compensation and other small business coverages, with strong finances, great pricing, and a solid reputation. Its unique Progressive Advantage offering makes for a relatively easy insurance shopping experience, allowing customers to get access to various forms of commercial coverage that Progressive may not be able to underwrite directly. Between that offering and its knowledge of a variety of industries, Progressive is a great fit for many businesses, so we give it our recommendation as the Best Workers’ Compensation Insurance Provider for Small Businesses.
Next Insurance (Runner-Up)
Though it is only a few years old, 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 account. This makes the company a sound choice for worker’s compensation insurance, which often requires immediate action and a quick response from the insuring company.
- Instant online access to a real-time updated certificate of insurance
- Risk management resources available online
- Doesn’t offer pay-as-you-go policies tied to current payroll
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 Next, a monthly workers compensation premium can cost as little as $14, but there are a number of 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 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 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.
Despite its breadth of online tools, one downside to Next when compared to some competitors is that it doesn’t offer pay-as-you-go policies tied to real-time payroll data. What this means is that rather than having your monthly workers’ comp insurance payments based on actual payroll, they are instead estimated based on the previous year’s data. This can result in over- or under-payments, and ultimately adjustments at the end of the year. Despite this minor drawback, Next has an excellent reputation among its customers. Its rating from the Better Business Bureau remains high at an A, which means they do an excellent job responding to and addressing customer complaints that do arise.
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 Next’s broad range of commercial policy offerings, make it our pick as one of the best overall workers’ compensation insurance carriers.
Nationwide Workers’ Comp (Best for Construction)
Nationwide is one of the largest insurers of any type in the U.S. Having been founded in 1926 in Ohio, Nationwide today truly lives up to its name, offering a comprehensive set of commercial insurance products in states across the country.
- Excellent reputation and customer satisfaction ratings
- Expertise in a variety of industries, with ability to easily package additional relevant commercial policies
- Strong resources to help businesses manage health and safety risks
- Little pricing information available without speaking to an agent
Nationwide has one of the strongest company reputations among commercial insurance providers. Of the companies evaluated in this guide, Nationwide ranked highest in J.D. Power’s most recent U.S. Small Commercial Insurance Study, with a score of 854 out of 1,000. 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.
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 and location that create greater coverage needs for your business.
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.
Nationwide is devoted to helping businesses find the appropriate coverages for their industry and needs. Nationwide has a helpful guide on their 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.
Nationwide is one of the top 10 largest commercial 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, with A+, A1, and A+ marks from A.M. Best, Moody’s, and S&P, respectively.
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.
ADP (Best Pay-As-You-Go Workers’ Compensation Insurance)
ADP is one of the leading providers of human resources and payroll technologies in the market today, and ADP’s affiliate, Automatic Data Process Insurance Agency (ADPIA), specializes in helping small and mid-sized employers find commercial insurance coverages and workers’ comp policies.
- Integration with ADP payroll software can make it easy to manage policies
- Pay-as-you-go insurance program helps calculate more accurate premiums
- Works with carriers specializing in high-risk businesses, like construction
- Operates as a broker rather than providing insurance directly
- May not make as much sense for businesses that do not already use ADP software
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. ADP is not listed on JD Power’s customer satisfaction study, but ADP does rate 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.
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 their payroll. This pay-as-you-go structure results in more accurate premium payments, improved cash flow, and easier audit processes.
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.
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.
ADP has its own financial strength 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.
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’ comp premiums. For this reason, ADP is our choice for Best Pay-As-You-Go Workers’ Compensation Insurance.
List of Workers’ Compensation Companies by Market Share
|8||Accident Fund Group||3.3%|
|9||New York State Insurance Fund||3.2%|
Each company featured in our guides has been independently selected and reviewed by our research team. If you select one of these companies and click on a link, we may earn a commission.
By clicking on these links, you may be taken to one of our insurance partners. The specific company listed here may or may not be included in our partner’s network at this time.