Workers' comp covers medical care and partial wage replacement when employees get hurt or sick on the job. Nearly every state mandates it. The coverage protects employees regardless of fault and shields your business from most workplace injury lawsuits. Workers' comp benefits become the employee's only legal remedy.
Workers' Comp Insurance
Workers' compensation insurance covers medical bills and lost wages when employees get hurt or sick because of their job.
This guide helps you understand what workers' comp covers, figure out if your business needs it, estimate your costs and how to get coverage.
Get workers' comp insurance quotes from your best provider fit with our matching tool below.
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Updated: September 14, 2026
Advertising & Editorial Disclosure
Featured Partner
The Hartford
- In business since 1810, The Hartford is one of the largest workers' compensation writers in the country.
- The Hartford ranks second overall in MoneyGeek's 2026 workers' compensation study, which covers all 50 states and Washington, D.C., and wins the Best for Professional Services category.
- Policyholders manage claims, payments and medical services through My Workers' Comp Connection.
- In 27 states, concentrated in the Northeast, Midwest and South, The Hartford is the cheapest workers' comp insurer MoneyGeek analyzed.
*MoneyGeek featured partner. Editorial rankings below are independent of this placement. Rates, rankings and savings comparisons are based on MoneyGeek's independent research and Hartford-reported data as of 2026. Figures are estimates and averages, not a guarantee of any individual quote, premium or discount.
What Is Workers' Comp Insurance?
A standard workers' comp policy has three coverage parts:
- Workers' Compensation Insurance (Part A): State law determines every benefit your injured employees receive, and Part A pays them all. Coverage spans medical treatment, roughly two-thirds of average weekly wages during recovery, rehabilitation costs and death benefits for dependents. No dollar cap applies.
- Employers' Liability Insurance (Part B): Legal costs are covered when workers' comp doesn't resolve the claim: third-party lawsuits, intentional harm allegations and spousal loss-of-support suits. Unlike Part A, this coverage carries dollar limits you choose at purchase.
- Other States Insurance (Part C): Fills the gap when employees work in states your policy doesn't list. Skip it and any out-of-state assignment can expose your business to uninsured liability.
We've also left additional resources to help you learn more about workers' comp coverage.
Who Needs Workers' Comp Insurance?
Whether you need workers' comp depends on your state's laws and any contractual requirements from clients or landlords. Most states require coverage before your first employee's first day, though some set higher thresholds.
Your business likely needs workers' comp if you:
- Have employees on payroll: Most states require coverage before your first W-2 employee starts, full-time or part-time.
- Hire seasonal or temporary workers: Short-term hires count as employees in most states and trigger the same coverage requirements.
- Use subcontractors or 1099 workers: Some states treat certain contractors as employees for workers' comp purposes regardless of how you classify them on paper. Getting it wrong costs more than the premiums you avoided. Back charges, fines and potential lawsuits can follow an audit.
- Work in high-risk industries: Construction, manufacturing and health care often have stricter requirements or lower employee thresholds than other sectors.
- Need to meet contract requirements: Clients, general contractors and property owners typically require proof of coverage before work begins.
- Lease commercial space: Many landlords require workers' comp documentation in lease agreements, even in states where coverage isn't mandated.
How Much Does Workers' Comp Insurance Cost?
The cost of workers' comp insurance averages $113 per employee per month (or about $1,354 annually) for businesses with one to four employees. Your actual cost depends on your industry, payroll, claims history, location and the types of work your employees perform.
Cost is primarily influenced by the following factors:
How to Get Workers' Comp Insurance
Workers' comp deadlines don't move. Missing them means fines, contract violations or operating illegally. Learn how to get workers' comp insurance before your next hire date or contract start:
- 1
Start with any deadlines you must meet
Work backward from your coverage deadline and build in at least two to three weeks for approval and setup. Four deadlines can force your hand:
- State requirements: Most states require coverage before your first employee starts.
- Contract start dates: Clients and general contractors require proof of coverage before work begins.
- Lease agreements: Commercial landlords ask for proof of coverage before you move in.
- Loan or financing: Lenders may ask for proof of coverage before approving funding.
- 2
Gather the information insurers will need
Before you request a single quote, pull these together. Missing details slow approval and can push your start date past your deadline:
- Business formation documents (articles of incorporation, LLC operating agreement or DBA registration)
- Federal Employer Identification Number (FEIN)
- Employee count and job descriptions
- Estimated annual payroll
- Prior coverage details
- Subcontractor certificates (some states require proof that subcontractors carry their own coverage)
- 3
Determine your classification codes
Each employee receives a classification code based on their job duties, and that code determines your premium. Accuracy here affects your total cost:
- Your industry sets the starting point: Construction, retail, health care, manufacturing.
- Every distinct job type may need its own code: A construction company likely needs separate codes for carpenters, electricians and office staff.
- Use accurate descriptions: Putting a roofer in an office worker code causes incorrect premiums and audit penalties.
- Bring an agent in early: Classification is complex and agents can confirm codes match your operations.
Wrong classifications from the start lead to premium adjustments, audits and coverage disputes.
- 4
Compare quotes from multiple insurers
Rates for the same coverage can vary by 20% to 50% or more. Use these steps to compare business insurance quotes:
- Get at least three quotes from insurers with experience in your industry.
- Look for industry specialists who price your risk more accurately and are less likely to reclassify you at audit.
- Ask about pay-as-you-go options that tie your premium to actual payroll each period instead of a large deposit upfront.
- Confirm Part B limits before you sign. Contracts often require a waiver of subrogation or alternate employer endorsements, and not every policy includes them by default.
- Ask about safety program discounts. Documented training and loss prevention records can reduce your premium. Ask each insurer directly what qualifies.
- 5
Finalize coverage and get your certificate of insurance
Review policy documents line by line to confirm every classification and limit matches what you quoted. Pay your deposit, set your start date to match the deadline from the first step and request certificates of insurance before you sign any contract or lease.
Workers' Comp Insurance: Next Steps
You need workers' comp coverage, but your specific situation determines what you should focus on first. You might be hiring your first employee and need coverage fast, comparing insurers to find better rates, or trying to figure out if your existing policy has the right endorsements. The guidance below helps you take the right next step based on where you are.
Start here: Compare providers before getting quotes
Workers' comp rates vary by insurer because each carrier specializes in different industries and prices risk based on its own claims data. A construction-focused insurer may offer better rates for contractors than a carrier that primarily writes office-based businesses.
The resources below can help you narrow down your options:
Carriers unfamiliar with your industry are more likely to decline your application or charge a premium that doesn't reflect your actual risk. Seek out insurers with a track record in your sector.
Get Workers' Comp Insurance Quotes
Ready to compare workers' comp insurance quotes? MoneyGeek matches you to providers that specialize in your industry. Use our tool:
About Angelique Palenzuela-Cruz
Angelique Palenzuela-Cruz is a Business Insurance Content Writer at MoneyGeek, where she specializes in general liability, workers’ compensation and professional liability insurance. Her work helps small business owners understand how these policies apply to coverage, including risks like customer injuries, employee injuries, professional mistakes, client contract terms and industry-specific coverage requirements.
She primarily covers service-based businesses where liability and employee coverage decisions are especially important, including cleaning, consulting, beauty and wellness, childcare, education, fitness, food service, pet care, repair and maintenance, and other professional services.
Before joining MoneyGeek, Angelique spent nearly 12 years at Guthrie-Jensen Consultants, one of Southeast Asia’s largest management training firms, where she advanced from Training Consultant to Managing Consultant. In that role, she worked with business clients to assess operational needs, develop training programs and present performance analyses to executive decision-makers. She also helped establish Gladwin Training Consultancy, where she served in learning solutions and client service roles.
Her background gives her practical context for writing about how businesses operate, manage client expectations, structure teams and make risk decisions. At MoneyGeek, she applies that experience to business insurance content, connecting coverage to actual business needs.
LinkedIn: linkedin.com/in/ma-angela-cruz
Email Contact: angelique.palenzuela@moneygeek.com