Last updated: October 2026

How Much Is Workers Comp Insurance, Really?

Your real cost depends on four variables: class code, state, payroll volume, and claims history.

Your Claims History Controls What You Pay Next Year

New York’s State Insurance Fund describes experience rating as a credit or debit to the manual rate for your classification, based on your own loss experience. The experience modification rate (EMR) is that credit or debit, a percentage above or below 100% of the manual rate premium.

In Washington, the Department of Labor & Industries (L&I) sets this factor each year by comparing a business’s losses with those expected for its risk classification. Losses below what L&I expects bring a factor below 1.0 the next year, and losses above it bring a factor above 1.0. The experience period is the oldest three of the four fiscal years before the new rates take effect, so the most recent year is left out.

A claim affects a Washington business’s premiums for three calendar years, and the factor generally cannot rise or fall more than 25% in one year.

With a strong return-to-work program and no claims counting against its factor, a Washington business can still see its rate rise when its risk class rate goes up. L&I says helping injured workers return to work quickly and safely does have a return on investment.

Some states skip experience rating for employers below a premium threshold. Washington uses no threshold: a business that reported worker hours during the three year experience period is experience rated.

What Your Class Code Says About Your Risk

New York’s State Insurance Fund says rates are usually per $100 of payroll, with the rate determined by job classification. New York’s 2025 class code list puts the loss cost for clerical code 8810 at $0.10 per $100 of payroll, against $2.97 for contractors’ executive supervisors at code 5606. The State Insurance Fund arrives at its rate by multiplying the approved loss cost by its loss cost multiplier.

Misclassification cuts both ways. If your insurer codes a field supervisor as clerical, the audit after the policy term can reclassify those wages and raise your premium for the audited period. If they code an office manager as a field worker, you overpay.

In Texas, the business is classified rather than each employee’s job, but clerical code 8810 is an exception for employees doing office work exclusively. A plumbing company’s office administrator who does only office work, in an area separated from other operations by structural partitions, is rated at 8810, not at the plumbing rate.

Give that administrator any other duty and Texas assigns their total payroll to the highest rated classification they are exposed to.

How Much Is Workers Comp Insurance in Your State?

Workers compensation is regulated at the state level, and pricing varies dramatically. Oregon’s Department of Consumer and Business Services ranks premium rates in every state and the District of Columbia. Its 2024 index put New Jersey at $2.16, New York at $1.98 and California at $1.86, between 170% and 198% of the study median. Florida, Virginia and Indiana sat below the median, at $1.00, $0.73 and $0.71.

Four states run their own workers’ comp funds: North Dakota, Ohio, Washington and Wyoming. Who must buy from each fund differs by state, and the workers comp guide explains the rules for each. In Washington, workers pay on average about 24% of the premium, according to L&I, and about the same share under its proposed 2027 rates.

Oregon also charges a Workers’ Benefit Fund assessment of 1.8 cents per hour worked for 2026. California requires every insurer to collect a State Fraud Surcharge from each insured employer, shown as a separate charge on the policy.

How the Premium Formula Assembles Your Price

In Texas, the premium follows one formula: (payroll / 100) x rate x experience modifier, if one applies. Each piece moves independently.

An EMR change from 1.0 to 1.2 multiplies your entire premium by 1.2, across every dollar of payroll and every class code on your policy.

Washington is the exception: L&I charges an amount per hour worked, so when wages go up, the rate paid stays the same.

The payroll component is remuneration for each classification, which in Texas includes commissions, bonuses, and holiday, vacation and sick pay. Texas and New York exclude the extra pay for overtime, provided your records show overtime pay separately for each employee and in total by classification. Check your state’s rules before assuming the exclusion applies to your policy.

Pay-As-You-Go Bills on Actual Payroll

Traditional workers compensation policies bill premium on the payroll estimate you provide at the start of the policy year. After the policy term ends, the carrier audits your actual payroll against the estimate. As a result of the audit, your premium for the audited period can go up or down.

New York’s State Insurance Fund says its pay-as-you-go plan, PayGo, aligns premiums to your payroll each pay period, so premiums no longer have to be estimated. You can choose to report weekly, biweekly or monthly, and the payroll verification at the end of your policy year still happens.

Among payroll providers, Gusto offers it through NEXT Insurance, which integrates with Gusto to deduct the premium every payroll. New York’s State Insurance Fund also accepts employers that run payroll in-house, through its reporting vendors.

New York’s State Insurance Fund says PayGo keeps pace with the month-to-month flows of seasonal business.

When Your Rate Changes and Who Decides

Your workers comp rate is not locked permanently. In Washington, L&I sets proposed rates each fall for the following year. Individual employers may see their rates go up or down with their recent claims history and with changes in claim frequency and cost in their risk class. A rate decrease in your state does not guarantee your premium drops if your mod went up simultaneously.

You can dispute a premium bill or final audit you believe is wrong. In Oregon, the Small Business Ombudsman for Workers’ Compensation lists payroll amounts and worker classifications among common issues. It says to contact your insurance company or agent first, and that missing the 60-day deadline can limit your options.

Get a Quote That Reflects Your Actual Risk

Stop searching for average costs and start collecting quotes built on your specific numbers. Gather your current payroll by job function, your three-year claims history, and your most recent experience mod worksheet before contacting any carrier or broker.

Outside the four exclusive state fund states, request quotes from at least three carriers. Ask each one to show the class codes they assigned, the base rate per code, the mod they applied, and every surcharge or credit. Comparing total premiums without seeing the components is like comparing grocery receipts without checking the items. One carrier’s lower price might reflect a wrong classification that triggers an audit adjustment later.

Review your workers comp cost per employee after collecting quotes. Visit the workers comp resource hub for deeper guidance on audits, class codes, and rate management. If your mod is above 1.0, start with your EMR breakdown before shopping carriers.

This is not legal or financial advice. Consult a qualified professional for your specific situation.