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Arizona Workers' Compensation Insurance

Under Arizona law, it is mandatory for employers to carry workers’ compensation insurance for their employees. Employers without workers’ compensation insurance may be guilty of a Class 6 felony.

Read on for who needs work comp insurance, who offers it, and how to buy it.

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Small Business Work Comp Requirements in Arizona

Workers' compensation is a "no fault" system; injured workers receive medical and compensation benefits no matter who causes the job-related accident.

Arizona businesses are required to carry workers' compensation insurance if they have any employees. Workers’ comp is mandatory regardless of the number of workers, whether they are part-time, full-time, minors, illegal immigration status or family members.

The few exceptions to this include:

  • Domestic workers do not need to be covered.
  • Sole proprietors do not need coverage. However, any employees working a sole proprietor must be covered.
  • Independent contractors do not need to be covered, but in the event of a claim, the state courts decide on a case-by-case basis employee vs. contractor status. Here are the common law guidelines.
  • Employees may voluntarily reject workers’ compensation insurance by providing a written notice to the employer. The employer must file this with the workers’ compensation insurance carrier.

Unlike some states, Arizona does not make exceptions for corporate officers, directors and members of an LLC. They must be covered if they are considered employees.

How to Buy Small Business Workers’ Compensation Insurance

Arizona has a private market, which allows small businesses to buy workers' compensation from any private insurance carrier or agency that is licensed to write in that state.

To get workers’ comp coverage:

  1. Add up your payroll by class code, or type of work performed.
  2. Find a licensed commercial insurance agency or carrier.
  3. Contact them to request a quote. Have your payroll information, EIN number and any existing coverage details in front of you.

Arizona also maintains a state fund that competes with the private market. If you’re still having trouble finding coverage, you can contact NCCI, which will place you with a carrier through the state’s assigned risk pool.

Coverage and Rates in Arizona

Employers must comply with the state where employees work, regardless of where the business was founded or operates. If operating in multiple states, an All-States Endorsement might be needed to provide full coverage for employees.

Arizona has relatively low workers’ compensation insurance rates, compared to the national average. But like many states across the country, Arizona is seeking a way to address opioid abuse. In early 2018, the governor supported legislation to protect injured workers from being over-prescribed opioids. These measures are also aimed at controlling escalating medical costs in the state workers’ compensation system.

Workers’ comp premium factors in the nature of your business (called your assigned class code), payroll of employees being covered and past coverage and claims. NCCI collects state and national data on workplace injuries, and recommends rates by class code. The Arizona Department of Insurance regulates and approves rates for Arizona insurance carriers, based on NCCI recommendations.

Arizona Work Comp Resources

Editor's note: Last updated on September 12, 2018

Here's What You Need to Get Started

To buy workers compensation insurance, you need to request a quote from a licensed insurance agent and provide some details about your business.

Here’s what to have in front of you:

  • Number of employees in each class code.
  • Total payroll for all employees. You may be able to exclude yourself if you don't wish to be covered under the policy. 
  • Federal ID Number. If you are a sole proprietor, you can use your Social Security Number.
  • Copy of your workers comp insurance policy, if you've had coverage or claims in the past few years. If you know your company's experience mod, please have your experience mod rating sheet or policy in front of you. Otherwise, you will be assigned a default rating of 1.0.

The information on this page has been interpreted and summarized for your convenience. Please consult your state's governing authority for the most current and complete legislation.