[Updated February 15, 2019]
By Desiree DeNunzio, Insureon Contributor
Whether your business is large or small, workers’ compensation insurance provides important protections for your employees and your business. However, the cost of workers’ compensation will vary depending on the state where you do business and several other factors.
States have different requirements for workers’ comp, which will affect how much you have to pay to protect your business. In general, rates by state are based on a combination of business risks, benefit levels, state-specific regulations, and medical fees.
In most states, you have the option to compare quotes with private insurance carriers or a state workers' comp fund. However, North Dakota, Wyoming, Ohio, and Washington only allow businesses to purchase a policy through a workers’ compensation state fund.
Continue reading to learn more about states with the highest and lowest rates for workers’ comp, or start a free online application to compare specific quotes for your business and location with Insureon.
Where can you find the lowest workers’ compensation rates by state?
The Oregon Department of Consumer and Business Services recently published a study that compares workers’ compensation rates by state in 2018 (the most recent year with available data). The most recent report lists the national median rate for workers’ compensation at $1.70 per $100 in employee wages, the lowest it’s been since 1986.
There are 38 states with rates below $2 per $100 in employee wages, including the five states with the lowest: North Dakota, Indiana, Arkansas, West Virginia, and Utah.
The lowest workers' comp rates by state are:
- North Dakota: $0.82
- Indiana: $0.87
- Arkansas: $0.90
- West Virginia: $1.01
- Utah: $1.06
North Dakota was the state with the lowest workers' comp insurance rate in 2018, according to an Oregon Department of Consumer and Business Services report.
Some states have higher rates because of local laws and regulations and more high-risk jobs. For example, New York in the past few years has increased the amount an injured worker can be paid after a claim by more than double. Negotiations between legislators, business lobbies, insurance providers, and unions on workers’ compensation benefits can also impact costs.
In 2018, New York led the United States with a rate that was more than $3 per $100 in employee wages, followed by California, New Jersey, Alaska, and Delaware.
The highest workers' comp rates by state are:
- New York: $3.08
- California: $2.87
- New Jersey: $2.84
- Alaska: $2.51
- Delaware: $2.50
New York led the United States with the highest workers' comp insurance rate in 2018, according to an Oregon Department of Consumer and Business Services report.
Which region has the lowest workers' comp rate?
Each region of the United States has states with higher rates and those with lower ones. For example, although California has one of the highest rates for workers’ compensation insurance, the states that border it are among those with the lowest rates.
Here are the median rates (per $100 of payroll) for previous years:
- 2018: $1.70
- 2016: $1.85
- 2014: $1.85
- 2012: $1.58
- 2010: $2.04
- 2008: $2.26
Overall, the median U.S. rate for workers’ compensation is trending lower. The median rate for workers’ compensation in the United States is more than 50 cents cheaper in 2018 than in 2008.
How do I estimate my workers’ comp costs?
Workers’ compensation insurance is required for most businesses in most states, so it’s an expense that must be calculated into your budget if you have employees. Timing is also important when you are considering when to buy workers’ comp coverage.
Most states have a workers’ comp division that sets rates, and they’re usually re-evaluated on an annual basis. Although each state’s specific formula for determining workers’ comp rates is likely a little different, they follow the same general guidelines. For your business, the amount you will pay depends on:
- Your payroll. If your business operates in multiple states, it would depend on the number of people you employ who work in each state.
- Claims history. Rates for almost any insurance policy depend, in part, on past claims – the type, amount, and frequency of losses.
- Worker classifications. The level of risk associated with your business will also play a role in determining your workers’ comp rates. You might have a range of worker classifications even within a single company.
Review additional requirements and the workers’ compensation rate for your state, or start a free online application with Insureon to compare policy quotes for your business. Our agents are licensed in 50 states and are happy to answer questions.