Workers' compensation insurance rate is an assigned price set by a rating bureau used to calculate the insurance premium for workers' compensation policies.
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:
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.
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.
Want to understand work comp rates in a hurry? Here are the basics:
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:
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:
These adjustments are made to reflect changes in the 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.
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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 is broken down as:
However, because rates are set for each class code and within each state, they can vary widely. For example:
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 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:
Florida and Georgia are among the many states that use NCCI to recommend rates. California and North Carolina are examples of states that use their own independent rating bureaus.
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.
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.
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.
Looking for more on workers’ compensation cost? You might also like:
And for all of our resources on workers' compensation insurance cost, see Workers’ Compensation Cost: Resources to Keep You Compliant for Less.
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 page was originally published in 2019, but was updated in 2023 to be more current and comprehensive.
