Workers’ Compensation Insurance Cost Per Employee 2025

What is the average cost of Workers’ Compensation Insurance per Employee?

Wondering what workers’ comp could cost for your business? The average monthly expense per employee is around $94, but higher-risk industries could pay more. 

On average, you can expect to pay about $94 per month, or $1,128 annually, for workers’ compensation insurance for each employee. This figure does not include taxes and fees. 

Our figures are sourced from the rates of our leading partner carrier and are based on a typical payroll for each industry.

How does my Industry affect Workers’ Comp costs per Employee? 

Your industry type plays a key role in determining how much you'll pay for workers' compensation insurance. Industries with higher risks typically have higher premiums.

While the chart above provides a general look at workers’ comp costs by risk level, actual premiums can vary greatly depending on specific job roles within each industry. 

Here’s a closer look at the average monthly premium per employee for common roles within each category: 

White Collar

• Secretary - $4
• Accountant - $6
• Software - $10
• Outside Sales Rep - $15
• Engineer/Arc Architect - $17

Retail & Service

• Restaurant - $28
• Retail - $46
• Cannabis Dispensary - $59
• Janitorial - $67
• Hotel - $69

Artisan Contractors

• Electrician - $87
• Plumber - $114
• Property Manager - $120
• HVAC Contractor - $133
• Landscaper - $137
• Painter - $211

Construction

• Concrete Construction - $246
• Masonry - $337
• Framing - $357
• Carpenter - $480
• General Contractor - $579

All data has been derived by combining ZipRecruiter national payroll averages per industry with average rates of a national carrier partner.
Figures are for illustrative purposes only and do not include taxes or additional fees.

Note:  These averages are based on typical data; your actual costs may vary depending on your business’s unique factors, such as payroll size and claims history.

What other factors affect Workers’ Comp costs?

Aside from industry, other factors influence workers’ comp costs. These include payroll size, location, claims history, and policy limits. Let’s break down each one.

How does Payroll affect Workers’ Comp costs?

Your payroll size directly affects your workers’ compensation premium. The larger your payroll, the higher your premium will be, because premiums are calculated based on your payroll amount.

The way it works is a rate per $100 of payroll. So for every $100 of payroll, you have to pay your industry’s rate amount.

Here’s the basic formula used to calculate premiums: 

Annual Payroll divided by 100 x Rate = Annual Premium 

For example, if your business has $500,000 in payroll and your industry rate is $3 per $100 of payroll, your calculation would look like this:

$500,000 annual payroll divided by 100 ​× $3 industry rate = 15,000 annual premium

Kickstand Tip: 

The average workers' compensation rate is typically $3.00 per $100 of payroll. You can use this rate as a general guideline to estimate your premium. For more precise rates specific to your business, check out our rates by industry guide.

Your premiums are based on estimated payroll. At the end of your policy period, there’ll be an audit to double-check those numbers. If you’ve underpaid, you’ll need to settle up and cover the difference.

How does my claims history affect my Workers' Comp costs per employee?

Your claims history directly impacts your workers' comp premium. It’s measured by something called the Experience Modification Factor (ExMod), which is applied after your business has been running for about four years. 

This factor looks at the past injuries your business has had compared to other businesses in your industry and how likely it is for future claims to happen.

• New businesses start with an ExMod of 1.0, which means it doesn't affect your premium yet.
• If your business has a lot of claims, your ExMod can go up to 1.6, which would make your premium higher.
• If your business has a good claims history, your ExMod could go down to around 0.94, helping lower your premium.

Here’s how the Ex-Mod affects your premium:

(Annual Employee Payroll / $100) x The Rate x Ex-Mod = Your Annual Premium

For example, if your business has $500,000 in payroll, your industry rate is $3 per $100 of payroll, and you have an ExMod of 1.2, the calculation would look like this:

$500,000 annual payroll divided by 100 ​× $3 industry rate x 1.2 ExMod = $18,000 annual premium

Kickstand Tip: 

‍Keeping claims down early on works in your favor down the line!

Even if your Ex-Mod isn’t affecting your premium yet, it’s important to keep your claims low now. When your Ex-Mod starts to matter, having fewer or no claims will help you get lower premiums in the future. 

How does location affect Workers' Comp costs per employee?

Location plays a significant role in determining your workers' compensation premium, since workers’ comp is regulated at the state level. Each state sets its own rates based on the cost of claims within that state for each industry. 

To illustrate how location impacts premiums, here’s a comparison of landscaper premiums across different states: 

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For more information on workers' comp rates by state, refer to our Workers' Compensation Rates by State blog.

Other location-based factors include:

• Credits and Debits: In some states, such as New Jersey, you may receive credits (a discount) or debits (a surcharge) based on factors like claims history or industry risk. Some states, such as Pennsylvania, allow the underwriter to apply credits or debits, even if the state doesn't regulate rates directly.
• Dividends: In many states, insurance carriers may offer dividends. If your business has a good year with few or no claims, the carrier may refund some of your premium through dividends. 

How do Policy Limits impact Workers' Comp costs per employee?

Workers' comp itself has no limits on the amount it pays out for a covered workplace injury or illness. It typically covers medical costs, partial wages, and even disability benefits.

However, most workers’ comp policies include employer’s liability insurance, which does have limits.

Employer’s liability insurance protects you when an employee sues over their injury. For example, a technician at your telecom company could slip and fall, blaming you for an unsafe environment. This policy would cover your legal expenses up to its limits if the case went to court.

Basic liability limits are $100,000/$500,000/$100,000, but if you opt for higher limits like $1 million, your premium will increase by just a very small percentage. The added protection is usually worth the minimal cost.

Kickstand Tip:

If you’re in a high-risk industry like construction, or in industries with moderate risk like manufacturing, maintenance, or repair, higher limits are a good idea. For completely white-collar businesses like accounting, the basic limits should be enough.

How can you save money on Workers’ Compensation Insurance?

There are several ways to lower your workers’ compensation costs. Consider these strategies:

Classify your Workers correctly

Make sure each employee’s role is accurately classified. Riskier roles have higher premiums, so correct classification can save you money. For example, commercial cleaners (9014) cost less than residential cleaners (0917), while secretarial roles (8810) are the cheapest.

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Estimate your Payroll carefully

Workers' comp premiums are based on payroll estimates. Be as accurate as possible—if you report lower payroll and exceed it, you’ll owe the difference after the audit.

Choose an Annual or Semi-Annual Payment Plan

Some insurance companies offer discounts for paying your premium annually or semiannually instead of monthly. If you can pay upfront, it may save you money over the course of the year.

Consider who to include in your Policy

Policies don’t always require owner coverage. Excluding the owner can result in instant savings. If owners are included, be careful not to double-count.

Create a Safety Program

Safety programs reduce workplace injuries, which can qualify you for a discount. Examples include regular safety meetings and adhering to OSHA guidelines.

Start a Return-to-Work Program

Return-to-work programs help injured employees return in a limited role, lowering claim costs and keeping premiums down.

Implement a Drug- and Alcohol-Free Policy

A workplace drug- and alcohol-free policy reduces injury risk, and insurers often offer discounts for this program.

Lower your Experience Modification Rate (Ex-Mod)

Fewer claims mean a lower Ex-Mod, which translates to reduced premiums over time. Focusing on safety helps you maintain a low Ex-Mod.

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