Workers’ Compensation Insurance: How to Find the Best Coverage for Your Business

There are two ways to buy workers' compensation insurance: through a state fund or a private insurance company.
Kelsey SheehyAug 26, 2021

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If you have employees, you need . The coverage is mandated in most states, and it protects your business and your employees from the potentially massive expense of an on-the-job injury.

But workers’ comp coverage, like other types of , can feel like a black box. Where do you look? How much does it cost? How are rates determined? And what even constitutes a good workers’ compensation policy?

Keep reading for answers to those questions and more.

The average varies by state, but is typically 70 cents to $2.25 per month, per $100 of payroll, according to a 2020 report from the National Academy of Social Insurance.

Here’s what factors into a workers’ comp quote:

The cost of your policy may be out of your hands, as your premium is determined, in part, by state requirements and risk classification codes.

One factor that’s within your control: prior claims. Emphasizing workplace safety through training and facilities maintenance can result in fewer claims and cheaper workers’ compensation insurance.


There are typically two ways to buy workers' compensation insurance: through a state fund or a private insurance company.

Those options are narrowed to one for business owners in North Dakota, Ohio, Washington, Wyoming, Puerto Rico and the U.S. Virgin Islands. Those states and territories operate a monopolistic state fund, which requires businesses to purchase their workers’ comp coverage through that state fund.

A handful of other states run competitive state funds, which preserve the option to go with a private insurer, depending on which option offers the best rates.

If you have the option to acquire a workers’ comp policy through a private insurance company, you should get multiple quotes to compare premiums and coverage levels.

While cost is often the deciding factor, take note of other features and benefits to find the best workers’ compensation insurance for your small business.

Items to consider include:

You may also qualify for discounts if you bundle workers’ compensation coverage with other business insurance policies, such as , and .

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