Updated: February 2, 2026
Advertising & Editorial Disclosure
Workers' comp insurance costs an average of $113 per employee monthly ($1,354 per employee annually) for businesses with one to four employees across 408 industries and 46 states plus Washington, D.C.
This is a benchmark, not a quote. Insurers adjust workers' comp rates based on industry risk (how often and how severely injuries occur), business size (total payroll) and location (state-specific regulations).
MoneyGeek analyzed quote data from major U.S. small business insurance providers and modeled standardized premium estimates across common business profiles. These modeled results provide a consistent national benchmark and compare premiums by business size, industry and location.
Dataset Scope and Assumptions
Our cost modeling uses standardized inputs for consistent comparisons.
We incorporated modeled average payroll across all combinations of states, industry and employee counts to improve per-employee pricing accuracy. We used data from these sources for our cost factors:
How We Calculated Average Workers' Comp Costs
Our published averages represent modeled premiums for standardized business profiles, aggregated in two ways:
Segment averages were produced by aggregating modeled pricing trends across the full dataset so readers can compare how premiums shift across business types and regions on a per-employee basis.
Three baseline factors drive workers' comp pricing: industry classification, geographical location and business size. Insurers use these to estimate how often workplace injuries occur and how costly they are. Business size reflects payroll exposure, location captures state benefit mandates and medical costs, and industry signals the physical risk of the work.
We used the same approach in our cost modeling to estimate rates. Each driver creates measurable cost differences.
Industry classification is the largest baseline pricing driver for workers' comp coverage because it reflects injury risk. Insurers assess how physical the work is, what equipment or hazards are involved, and how frequently and severely injuries occur in each job type. A desk-based role carries lower claim costs than work involving heavy machinery, heights or repetitive physical strain.
In our analysis of 408 industries, workers' comp premiums range from 86% lower than average for Beauty, Body and Wellness Services to 204% higher than average for Transportation and Logistics.
Each state sets its own benefit levels, medical fee schedules and regulatory requirements for workers' comp coverage. Geographic location is the second strongest driver for workers' comp premiums. States with higher medical costs, more generous wage replacement formulas or longer claim duration patterns produce higher premiums. Legal environments that favor broader coverage interpretations or larger settlements also push costs upward.
Premiums across 46 competitive states, plus Washington, D.C., range from 44% below average in Indiana to 138% above average in New York.
Business size is the third baseline driver and affects workers' comp pricing differently than other coverage types. While total premiums rise with more employees, per-employee costs usually decline because larger businesses qualify for experience rating, gain administrative cost advantages and maintain stronger safety programs that reduce claim frequency.
Ninety-five percent of small businesses have 49 or fewer employees. Per-employee costs range from the baseline rate for one to four employees to 21% lower for businesses with 20 to 49 employees.
Industry classification creates the widest cost variation in workers' comp pricing because it captures the physical risk in different types of work. At the extremes are Beauty Services and Financial Services at $16 monthly per employee and Transportation and Logistics at $343 monthly per employee. Insurers assess injury frequency and severity based on job tasks, equipment and hazards.
Nearly three-quarters of industries price below the national average. Desk-based roles like Financial Services and Consulting cluster 75% to 85% below average due to minimal injury risk. On the other end of the risk spectrum, transportation and contracting/construction related industries sit over 180% or higher on average per employee compared to national benchmarks
| Agriculture & Natural Resources | $180 | $2,162 | -60% |
| Arts, Media & Entertainment | $102 | $1,225 | 10% |
| Beauty, Body & Wellness Services | $16 | $196 | 86% |
| Childcare Services | $41 | $492 | 64% |
| Cleaning Services | $135 | $1,619 | -20% |
| Construction & Contracting | $319 | $3,822 | -182% |
| Consulting Services | $23 | $278 | 79% |
| Education | $73 | $880 | 35% |
| Financial Services | $16 | $197 | 85% |
| Fitness Services | $74 | $892 | 34% |
| Food & Beverage | $46 | $550 | 59% |
| Healthcare & Medical | $56 | $678 | 50% |
| Hospitality, Travel & Tourism | $48 | $578 | 57% |
| Manufacturing | $160 | $1,926 | -42% |
| Marketing & Communications | $17 | $209 | 85% |
| Nonprofit & Associations | $66 | $795 | 41% |
| Other Professional Services | $25 | $304 | 78% |
| Pet Care Services | $73 | $872 | 36% |
| Real Estate & Property Services | $24 | $292 | 78% |
| Recreation & Sports | $125 | $1,497 | -11% |
| Repair & Maintenance | $83 | $998 | 26% |
| Retail & Product Rental | $61 | $726 | 46% |
| Tech/IT | $47 | $562 | 58% |
| Transportation & Logistics | $343 | $4,110 | -204% |
| Wholesale & Distribution | $204 | $2,449 | -81% |
Use these resources to explore costs for your industry.
Each state's unique workers' comp system creates different cost structures for employers. Estimates range from $63 monthly per employee (Indiana) to $269 monthly per employee (New York), and more than two-thirds of states price below the national average.
Only nine states cost more than 20% above the average, and seven of them cluster in the Northeast or West Coast. These regions have higher mandated benefits and medical costs, pushing per-employee premiums upward. The remaining 81% of states sit within 20% or further below the national average.
| Alabama | $74 | $882 | 35% | 9 |
| Alaska | $181 | $2,170 | -60% | 41 |
| Arizona | $90 | $1,079 | 20% | 17 |
| Arkansas | $65 | $777 | 43% | 2 |
| California | $256 | $3,069 | -127% | 46 |
| Colorado | $113 | $1,350 | 0% | 32 |
| Connecticut | $202 | $2,420 | -79% | 44 |
| Delaware | $128 | $1,537 | -14% | 37 |
| District of Columbia | $234 | $2,804 | -107% | 45 |
| Florida | $103 | $1,237 | 9% | 27 |
| Georgia | $99 | $1,193 | 12% | 25 |
| Hawaii | $138 | $1,654 | -22% | 39 |
| Idaho | $71 | $846 | 37% | 5 |
| Illinois | $143 | $1,720 | -27% | 40 |
| Indiana | $63 | $760 | 44% | 1 |
| Iowa | $68 | $818 | 40% | 4 |
| Kansas | $74 | $887 | 34% | 10 |
| Kentucky | $79 | $944 | 30% | 12 |
| Louisiana | $106 | $1,268 | 6% | 29 |
| Maine | $99 | $1,192 | 12% | 24 |
| Maryland | $119 | $1,433 | -6% | 35 |
| Massachusetts | $184 | $2,211 | -63% | 42 |
| Michigan | $115 | $1,378 | -2% | 33 |
| Minnesota | $112 | $1,338 | 1% | 31 |
| Mississippi | $71 | $856 | 37% | 6 |
| Missouri | $91 | $1,088 | 20% | 18 |
| Montana | $95 | $1,136 | 16% | 20 |
| Nebraska | $73 | $881 | 35% | 8 |
| Nevada | $97 | $1,169 | 14% | 22 |
| New Hampshire | $116 | $1,390 | -3% | 34 |
| New Jersey | $191 | $2,294 | -69% | 43 |
| New Mexico | $83 | $993 | 27% | 14 |
| New York | $269 | $3,226 | -138% | 47 |
| North Carolina | $88 | $1,061 | 22% | 16 |
| Oklahoma | $94 | $1,129 | 17% | 19 |
| Oregon | $104 | $1,247 | 8% | 28 |
| Pennsylvania | $133 | $1,595 | -18% | 38 |
| Rhode Island | $121 | $1,449 | -7% | 36 |
| South Carolina | $102 | $1,224 | 10% | 26 |
| South Dakota | $65 | $780 | 42% | 3 |
| Tennessee | $81 | $969 | 28% | 13 |
| Texas | $76 | $914 | 33% | 11 |
| Utah | $73 | $876 | 35% | 7 |
| Vermont | $107 | $1,278 | 6% | 30 |
| Virginia | $85 | $1,015 | 25% | 15 |
| West Virginia | $98 | $1,179 | 13% | 23 |
| Wisconsin | $95 | $1,145 | 15% | 21 |
Workers' comp costs per employee decline consistently across all business sizes, from $113 monthly for businesses with one to four employees to $89 monthly for those with 20 to 49 employees. The sharpest drop occurs at the first expansion point, where businesses adding their fifth employee see per-employee costs fall 10%.
This progressive discount occurs for two main reasons. Insurers offer volume discounts to retain larger clients, and growing companies typically develop better safety practices through increased industry experience, lowering claims risk.
Business size, industry classification and location set the baseline, but they don't lock in your final quote. Insurers adjust rates based on controllable factors like coverage design, risk management and underwriting information.
Methods that lower cost at quoting or renewal, plus operational changes that influence future pricing:
Apply these methods at quoting or renewal to reduce per-employee costs:
Insurers price workers' comp using specific job classification codes that reflect injury risk. Misclassified employees (assigning office staff to a higher-risk code, for example) inflate premiums unnecessarily. Review your policy's class code assignments with your agent to ensure each employee is placed in the most accurate category for their actual duties.
Workers' comp pricing varies considerably between insurers for the same business profile. Carriers use different risk models and have different appetites for specific industries or claim histories. Request workers' comp insurance quotes from at least three insurers 60 to 90 days before renewal to compare rates using identical coverage specifications and payroll projections.
Premiums are calculated based on payroll figures, so overestimating projected annual payroll raises costs immediately. Provide precise payroll data by employee class code at quoting and participate in the end-of-policy audit to adjust premiums based on actual wages paid rather than estimates.
Many insurers offer immediate premium reductions for qualifying businesses. Common discounts include drug-free workplace programs, safety committee participation and experience modification credits for favorable claims history. Ask your agent which discounts you currently qualify for and what documentation is required.
Insurers often reduce rates when businesses purchase multiple coverage types from the same carrier. Bundling workers' comp with general liability or commercial property can trigger multi-policy discounts. Request combined quotes to compare bundled pricing against separate policies from different carriers.
Your experience mod reflects your claims history compared to similar businesses and directly multiplies your premium. If your mod is above 1.0, review the calculation for errors in claims data or misclassified incidents. Contact your state's rating bureau to dispute inaccuracies that may be inflating your mod.
These changes require planning and resources but reduce claim costs and improve renewal pricing over time.
Workers' comp costs vary because insurers estimate claim frequency and severity based on your industry classification, business size and geographic location. The national average of $113 per employee monthly is a benchmark, not a quote for your situation.
This report shows where you fall, not your exact cost.
Three questions help you assess your position:
These questions identify which combination of factors influences your pricing, not just where you stand against the average.
Resources to identify low-cost providers and evaluate carrier options:
This report sets baseline expectations for your industry, size and state. Request quotes with identical business details so rate differences reflect actual pricing variation rather than input inconsistencies.
Select your industry and state to get a customized workers' comp quote.
If you want to learn more about worker’s comp insurance:
If you want to explore other types of business insurance:
About Angelique Palenzuela-Cruz
Angelique Palenzuela-Cruz is a Content Writer at MoneyGeek specializing in business insurance. She focuses on general liability, workers' compensation and professional liability coverage, helping small business owners cut through policy jargon and understand what they're actually buying.
Angelique has spent over five years reporting on personal finance, with deep experience in both insurance and lending markets. Her psychology background also gives her a unique understanding of how people actually process difficult financial decisions, allowing her to meet readers where they are, simplify complex concepts and build decision making frameworks that give them confidence. Whether you're learning about policies, comparing providers or trying to figure out requirements, Angelique does the legwork, digging into regulations, analyzing policy language and testing her explanations against agent-level standards so you get straight answers without fluff.
