How to Get Cheap Workers’ Comp Insurance in 2025: 7 Proven Ways to Pay Less

But, first - a word of caution.

Workers’ compensation insurance is based on what you pay your workers and the type of work they do.

Unlike other types of insurance, workers’ comp insurance involves an audit at the end of the policy period. 

That means that someone will either call you or come down to your business to examine your payroll records and make sure that everything wasset up correctly.

If they find that something is wrong, whether it’s that some payroll to employees or to uninsured subcontractors wasn't accounted for or that the type of work they do is classified incorrectly, you will owe additional premiums for the difference.

So remember, looks can be deceiving. Be very careful that the policy that looks the cheapest is not missing key information, causing you to pay more at the end of the policy. ‘Cause then it’s not really the cheapest :(

Now that you understand this crucial point, let’s talk about strategies to truly save money on workers' comp insurance and expand on the common mistakes that cost you money.

Classify your workers’ correctly

Workers’ comp is based on the concept that people who do riskier jobs are more likely to get hurt and therefore, their insurance will cost more.

There is a list of 500+ job roles called class codes for businesses and employees. Each role is assigned a specific rate that is used to calculate the premium. Within each industry, there can also be different roles for various types of jobs if the level of risk varies greatly. 

For example, a janitorial business can have employees who do a variety of different roles. There can be a secretary or two, cleaning teams specializing in residential or commercial cleaning jobs, a warehouse manager who oversees the inventory and supplies, a sales team that goes down to job sites and estimates job costs, and even a mechanic for maintaining the cleaning equipment.

Each type of role has a different level of risk and, therefore, a different cost. 

Commercial cleaners (9014) are cheaper than residential cleaners (0917), but the secretary (8810) is the cheapest by far.

If everyone is lumped together as residential cleaners, the policy would be much more expensive than it should be. 

So, the first step to getting an affordable workers’ comp insurance policy is to make sure that your employees and their payroll are assigned to the proper roles or class codes.

Estimate your projected payroll as well as you can 

Next, let’s discuss something that is really weird about workers’ comp insurance. The insurance company wants you to take a really good guess at how much you are going to pay your employees in the next 12 months. 

Anyone have a crystal ball they can share?

But in all honesty, they want you to sit down and try to figure out how many employees you'll have and what you are going to pay them. 

If you are very cautious and err on the side of less, your policy will be cheaper - that is until the audit. Remember, they will come check on you and if you paid your employees more than you estimated, the insurance company will calculate what you owe them and send you a bill. 

So, while it may seem that you found the cheapest workers’ comp policy, double check that the payroll they are using for the calculation makes sense.

Verify if you need to include all your types of workers

A business can have many kinds of people working for it: full and part-time employees, sub-contractors, independent contractors, and so on. 

Check on the owners

Another thing to note here is that owners can be included in the policy, but it's usually not required for them to be included. Their health insurance will usually take care of any injuries and they wouldn’t sue themselves so they don’t need legal protection. 

If you included the owner, a quick way to save money would be to remove them from the policy. YAY! Instant savings.

If you want to keep them included in the policy, just make sure you didn’t count them twice - once as an owner and once as a worker. That would be paying for the owner and an additional person when it really is just one person counted twice.

This is how to double-check your policy to make sure you are getting the most affordable workers’ comp insurance.

Create a Safety Program

Companies that have a formal safety program are less likely to have incidents and injuries on the job because they put an emphasis on safety. 

Therefore insurance companies will usually give a slight discount to businesses with a formal safety program. This is a written plan and can include daily and monthly safety meetings, tool box meetings, and constant review of OSHA protocols.

Start a Return-to-work (RTW) program

A return-to-work program helps injured workers ease back into the workforce. Even if they can’t do their regular job, and may have restrictions from their doctor, studies have shown that people who start working in some capacity, will recover faster and return to their full workload sooner and thus lower the cost of the claim for insurance companies.

It also helps the business because even though they are down an employee in one area, the employee helps out somewhere else and is another pair of hands to help juggle everything. Creating a return-to-work program requires effort, but the investment is highly worthwhile due to increased employee satisfaction and reduced insurance premiums.

Implement a Drug and alcohol-free workplace program

Studies have shown that people are five times more likely to hurt themselves at work when they are drunk or high. Crazy how high it is! Isn’t it? 

Therefore, the insurance company will give you a discount if you commit to implementing a drug and alcohol-free program in your workforce. This typically includes a written policy and random testing.  

Lower your Experience Modification Rate

Not only will claims cost the insurance company money, but over time, they will increase your premium cost as well. Any business that is four years old and meets a few other requirements will get assigned an Experience Modification Rate otherwise known as an Ex-mod. 

This rate basically compares your business to your industry's average rate of claims. It shows if you have more or less injuries than your industry average. 

If you have more claims, your premium will increase because you seem to be more prone to having injuries. 

However, if you have fewer claims than your industry average, the insurance company will give you a discount. This can make a big difference to your premiums so really pay attention to safety and try to do everything you can to avoid a situation where employees can get hurt. 

Ask for Dividends

In some states, there is a dividend program. This gives you money back if you had a year with less than average claims. The insurance companies are willing to give a percentage of the premium money back as a way to incentivize businesses to take safety seriously!

Price your policy now

There are many insurance agencies that offer online quotes. Some will even let you buy the policy instantly. In our experience, 2 out of 3 instant quotes are inaccurate and will not give you the proper coverage and you will get a nasty surprise bill at audit. As such, please be very cautious when using an instant quote to purchase software. Remember, appearances can be deceiving!

If you want to get an expert insurance agent to double-check your numbers and see if there are any ways to save you money, get started with a quick, no-obligation, instant quote and we’ll reach out to you shortly.