Workers' compensation insurance rate is an assigned price set by a rating bureau used to calculate the insurance premium for workers' compensation policies.
Workers’ Compensation Insurance Rates
A workers’ compensation insurance rate is the base price set by the state, and is used to calculate the policy premium for coverage. This means that rates can vary from state to state — and they often do, based on factors like the number of workers’ compensation claims being filed (and awarded) and regional healthcare costs.
In fact, average premium rates can range from under $1.50 to $3.00 or more, according to a 2020 study published by the Oregon Department of Consumer and Business Services.
If these numbers seem low, it’s because workers’ compensation insurance rates are represented as the price per $100 in payroll. For example:
- A rate of $1.68 means that a business with $100,000 in payroll would translate to $1,680 annually in work comp premiums.
- A rate of $0.35 means that a business with $100,000 in payroll would translate to $350 annually in work comp premiums.
In other words, a workers' compensation rate is not the workers' compensation insurance cost — but it is a key piece of how much a work comp insurance policy costs.
How Rates Impact Workers' Comp Cost
Workers’ compensation insurance costs are fairly standardized. The premium amount for a policy follows a formula:
(Payroll* x Workers’ Comp Rate) x (Credits or Debits) = Insurance Quote
*Payroll in hundreds of dollars. $60,000 annual payroll = 600 would be used in the formula above.
Rates are set by the state’s rating agency or bureau, and multiplied by total annual employee wages. However, different businesses are assigned different rates, based on the type of work they do.
This means that looking up a state's "workers' compensation rate" will give you a general estimate of the workers’ comp premium, but likely not an accurate price. To find out what your business will actually pay for workers' compensation insurance, get a no-obligation quote online in just 5 minutes.
Cheat Sheet: How to Interpret Work Comp Insurance Rates
Want to understand work comp rates in a hurry? Here are the basics:
- Based on classification code: Each class code is assigned its own rate. A plumber (NCCI code 5183) will pay $1.68 in Indiana, while a clerical worker (NCCI code 8810) will pay $0.35.
- May differ by state: For example, one study found that in 2020, New Jersey state rates ranged from $2.50 - $2.99, and Florida rates were less than $1.50.
- Represented per $100 in payroll: Divide gross payroll by 100, then multiply by the rate for estimated premium.
- Not the same as work comp wages: Find a chart of rates per week? This is likely the state-mandated amount paid out as a portion of wages for injured employees who are unable to work. Don’t confuse this for the insurance rate.
How Workers' Compensation Rates Are Set
Workers' compensation rates are determined by a rating bureau. The rating bureau’s responsibility is to set a baseline price of workers’ compensation insurance for each classification code within each U.S. state.
Classification codes are 3- or 4-digit numbers that assigned to businesses based on industry. By grouping together similar businesses, data on workplace injuries and illnesses can be collected and analyzed for each class code.
This data can show patterns, such as changes in:
- Number of or types of claims being filed.
- Cost per claim paid out.
- Total healthcare expenses for workers’ comp claims.
- Days of work missed by injured workers (and wages paid out as part of the claim).
This information is used by the rating agency to assess the relative risk associated with that type of work, and assign a rate commensurate with that risk.
While they're assigned to each class code individually, statewide rates are often raised and lowered at the same time and proportionally, based on a percentage. Some recent examples of this:
- “5.44% Workers’ Comp Rate Decrease Approved in Wisconsin"
- "Washington Proposes 3.1% Increase in Workers’ Comp Rates for 2022"
- "Florida Workers’ Comp Rates Set to Decrease, Again"
These adjustments are made to reflect changes in performance of the state’s workers’ compensation system as a whole, such as lower healthcare costs or improved workplace safety, resulting in fewer claims. Court decisions can also influence rate adjustments.
You Might Also Like: Everything You Need to Know About Workers’ Compensation Costs
Workers' Compensation Rates by State
In the majority of U.S. states, workers' compensation insurance rates are less than $1.50 per $100 in payroll.
According to research by the Oregon Department of Consumer and Business Services, 2020 premium index rate break down as:
- $2.50 to $2.99 - 1 state (New Jersey)
- $2.00 to $2.49 - 4 states (New York, Vermont, California, Hawaii)
- $1.50 to $1.99 - 17 states (including Pennsylvania and South Carolina)
- Under $1.50 - 29 states (including Florida and Illinois)
However, because rates are set for each class code and within each state, they can vary widely. For example:
- Same business, different state: Identical plumbing companies might pay very different premiums if they are located in Illinois vs. Indiana.
- Different business, same state: A California construction company will pay a much higher rate than a California accounting firm with the same payroll, because of the greater risk for a workplace accident.
This is why looking up a workers' compensation rate for a particular state or industry isn't particularly helpful. Workers' compensation insurance rates by state offer a relative comparison — whether premiums might be higher or lower than another state, and increasing or decreasing over time — but they do not fully represent a real-world insurance quote.
Workers Compensation Rating Bureaus
Workers’ compensation is regulated at the state level, which means each U.S. state has its own laws and regulatory bodies. For most states, rates are set by one of the following:
- The National Council on Compensation Insurance (NCCI).
- A rating bureau within the state’s regulatory body.
- A state rating bureau independent of the regulatory body.
Check your state to find out what ruling body is the rating bureau. From there, you may be able to look up or contact them for your company's classification code.
Base Rate States
Each U.S. state's rating bureau either issues base rates or advised rates. Strict "base rate states" like Florida require all insurers to use the workers’ compensation rates set by the state rating agency.
Some states (like New Jersey) allow insurers to deviate slightly from base rates to reflect the individual characteristics of an account. These would be shown in the form of a credit or debit applied to the premium.
In base rate states, workers' compensation premiums will be largely the same from one insurance carrier to another. In many states, however, rates are used as a benchmark and are not mandated.
Instead, the state’s rating agency publishes “advised rates.” Insurance carriers then submit their rates to the state’s regulatory body for approval, and they may be based in part on the insurer's individual history of losses. In some cases, the advised rate may differ greatly from the one insurance company to another — which means premiums vary more widely between insurers.
In non-base rate states, it's even more important to shop around and compare prices before purchasing workers' comp insurance.
Work Comp Insurance Rates vs. Work Comp Wages
Looking for a breakdown of workers' comp rates and find a chart of rates per week? Don't confuse this for your insurance rate.
Workers' compensation covers medical care for work-related injuries, but also pays the employee if they are unable to work while they recover. Employees are paid a percentage of their wages during this time, the amount is mandated by the state's work comp system and often shown as weekly wages.
Workers’ Compensation Cost Resources
Looking for more on workers’ compensation cost? You might also like:
- How Much Workers’ Compensation Costs
- How to Get a Workers’ Comp Quote
- How to Save Money on Small Business Insurance
And for all of our resources on workers' compensation insurance cost, see Workers’ Compensation Cost: Resources to Keep You Compliant for Less.
Get Workers’ Compensation Insurance
For the most accurate price, request a quote from several insurance carriers. Or, use an independent agency, which can shop around and present you with the most competitive quote. WorkCompOne was built by and for small business owners, so you can stay compliant for less time, money and hassle than traditional insurance agencies.
Get a workers’ compensation quote in 5 simple steps.
Editor's note: This post was originally published in 2019, but was updated in 2021 to be more current and comprehensive.