This article is for general informational purposes and is not insurance or legal advice; premium figures reflect the most recent published data (primarily 2024–2025) from NCCI, the National Academy of Social Insurance, and named carrier datasets, and your actual rate depends on state, class code, payroll, and claims history.
TL;DR — Quick Verdict
- The single biggest driver of your workers’ compensation premium is your NCCI class code, not your state: a clerical worker runs roughly $0.13–$0.35 per $100 of payroll while a roofer can hit $8.24–$18.00 for the same $100.
- State averages range from about $0.35 to $1.83 per $100 of payroll (NASI, 2021 data), with California and Montana among the highest and North Dakota, Indiana, and Arkansas among the lowest.
- By industry, monthly premiums span roughly $34 (finance/accounting) to $179–$337 (construction), per Insureon and Kickstand carrier data.
- The national average employer cost fell to about $0.90 per $100 of payroll in 2024, down from $0.93 in 2023, and NCCI projected a further ~6% average decrease into 2025.
- Four monopolistic states — Ohio, North Dakota, Washington, and Wyoming — force you to buy from a state fund, which changes both price and your shopping options entirely.
- Recommendation: verify your class code before you accept any quote; a single misclassification correction has cut premiums by up to 50% in carrier case files.
A roofing contractor and an accountant can operate on the same street, pay their staff identical wages, and receive workers’ compensation bills that differ by a factor of 60. That is not a pricing error — it is the entire logic of the system. Workers’ comp premiums are engineered to match the expected cost of injury to the hazard of the work, so a roofer rated near $8.24 per $100 of payroll in Florida (Florida Office of Insurance Regulation, 2025) sits worlds apart from a clerical employee near $0.13.
Two numbers govern what any employer pays: the state you operate in and the class code assigned to each worker. The National Academy of Social Insurance pegs the national employer cost at roughly $0.90 per $100 of covered payroll for 2024, but that average conceals a state range of $0.35 to $1.83 and industry monthly premiums that swing from about $34 to over $337. This article maps both axes — industry and state — using NCCI class-code logic, carrier datasets from Insureon and The Hartford, and NASI’s federal cost data, then shows the exact arithmetic so you can estimate your own bill before an agent ever quotes you.
What Workers’ Comp Actually Costs Per $100 of Payroll
Every workers’ compensation premium starts from one deceptively simple formula, standardized by NCCI and used in nearly every state: (Annual Payroll ÷ $100) × Class Code Rate × Experience Modification Rate = Annual Premium. Payroll sets your exposure, the class code rate reflects the hazard of the work, and the experience modification rate — your “mod” — adjusts the total up or down based on your own claims history versus peers.
The rate per $100 of payroll is where the real spread lives. Below are representative class-code rates drawn from carrier and state filings; they illustrate the scale of variation rather than a quote for any single business.
Source: Florida Office of Insurance Regulation, FFVA Mutual, and WorkCompOne class-code data, 2025–2026 (verify at ncci.com). Rates are illustrative and vary by carrier and loss cost multiplier.
Notice that the accountant-to-roofer spread runs from $0.30 to $18.00 — roughly 60 to 1. That gap explains why a state average is nearly useless for budgeting your own line item, and why understanding how business insurance premiums are calculated matters more than memorizing a single headline number.
Premiums by Industry: From $34 to $337 a Month
Carrier datasets translate those per-$100 rates into monthly dollars, which is how most owners actually experience the cost. The pattern is consistent across insurers: office-based work sits at the bottom, skilled trades in the middle, and construction at the top.
Source: Insureon and Kickstand Insurance small-business customer data, 2025–2026 (verify at insureon.com). Figures are medians for illustration; taxes and fees excluded.
Across all industries, Insureon reports small businesses pay a median of about $54 per month ($643 annually), while The Hartford’s book averages $81 monthly for customers under $300,000 in payroll. Per employee, high-risk construction can exceed $4,000 per year — an order of magnitude above the roughly $780–$2,400 typical range. If you carry other coverage, it’s worth comparing these figures against general liability insurance rates by industry, since the two often move together for trades.
Premiums by State: A $1.48 Spread That Reshapes Your Budget
State is the second lever, and its influence is structural rather than incidental. Each state sets base rates through its rating bureau, adopts or rejects NCCI loss costs, and legislates its own benefit levels — all of which flow into the price you pay. NASI’s cost data shows employer costs ranging from about $0.35 to $1.83 per $100 of covered payroll depending on the state (2021 data).
The reasons behind the spread are concrete. California’s costs run high partly because of generous statutory benefits and higher medical-cost inflation, landing near $1.34 per $100 of payroll versus $0.57 in Michigan, according to NASI figures cited by Forbes Advisor. Meanwhile the national employer average slipped to $0.90 per $100 in 2024 from $0.93 in 2023, and Congress.gov’s CRS analysis records $1.25 per $100 back in 2017 — a reminder that these figures drift year to year and must be checked against current filings.
Source: National Academy of Social Insurance, “Employers’ Costs for Workers’ Compensation Per $100 of Covered Wages by State” (verify at nasi.org).
One structural wrinkle overrides everything above: monopolistic state funds. In Ohio, North Dakota, Washington, and Wyoming, you cannot buy workers’ comp on the open market at all — coverage comes only through the state fund. That removes price shopping as a lever and makes classification accuracy your primary cost control.
Private Carrier vs. State Fund: Which Is Better for Your Business?
Outside the four monopolistic states, most employers choose between private carriers and, in the 17 states that offer one, a competitive state fund. The trade-off is real and situational.
Private carriers compete on price, bundle workers’ comp with other lines, and often reward strong safety records with schedule credits and dividends. In Texas, for instance, insurers file a loss cost multiplier on top of NCCI loss costs to set their rate — meaning two carriers can quote the same class code very differently, per the Texas Department of Insurance. State funds, by contrast, typically accept all comers regardless of loss history, which is invaluable for a high-hazard or claims-heavy business that private carriers decline.
Verdict
For a clean-record business in a low-to-moderate hazard class, a private carrier almost always wins — competition, bundling discounts, and dividend potential drive the effective rate below state-fund pricing. For a new business, a high-hazard trade, or an employer with a poor claims record that private markets won’t touch, the state fund is the better and sometimes only option. In the four monopolistic states, the decision is made for you: the state fund is mandatory.
Because bundling changes the math, many small employers weigh workers’ comp alongside a business owner’s policy vs separate policies decision and their total small business insurance package costs rather than pricing each line in isolation.
What Most Employers Get Wrong About Workers’ Comp Pricing
Three mistakes cost businesses real money every renewal cycle, and all three are avoidable.
Mistake 1: Accepting the class code the agent enters. Misclassification is the most expensive error in the system. Put a clerical employee in a light-manufacturing code and you may overpay by dollars per $100 of payroll. The consequence compounds annually; the correct action is to verify every code against the NCCI lookup tool before signing. Carrier case files show class-code corrections cutting premiums by up to 50%.
Mistake 2: Underreporting payroll to lower the quote. Premiums are estimates trued up at audit. Report low, exceed it, and you owe the difference in a lump sum — often a nasty surprise. Report your real projected payroll and adjust mid-term if headcount changes.
Mistake 3: Ignoring the experience modification rate. Owners treat the mod as fixed, but it’s the one multiplier they directly control. A string of small claims pushes it above 1.0, inflating every dollar of premium; a clean record pulls it below 1.0. Investing in safety and managing claims aggressively is the highest-return lever available. Understanding filing a business claim without premium spikes is part of protecting that number.
Is Workers’ Comp Worth It — and Who Actually Needs It?
For nearly every employer, the question is moot: workers’ compensation is mandatory in every state except Texas, which uniquely lets employers opt out (and accept the litigation exposure that comes with going “non-subscriber”). The real decision is how much to spend on risk control to lower a cost you cannot avoid.
Run the arithmetic on a $500,000-payroll landscaping business at a $3.00 rate per $100: ($500,000 ÷ 100) × $3.00 = $15,000 annually before any mod adjustment. Drop the mod from 1.10 to 0.90 through a two-year safety push and the same policy costs $13,500 — a $1,500 recurring saving for interventions that often pay for themselves. For a $200,000-payroll accounting firm at $0.30, the whole policy is roughly $600 a year, and the leverage is smaller.
The logic is conditional. If you run a high-hazard, high-payroll operation, safety investment and mod management deliver outsized returns and belong at the center of your contractor insurance requirements and costs planning. If you’re a low-hazard office with a handful of staff, the premium is small enough that accurate classification and a bundled policy capture nearly all the available savings. Structuring as an business insurance needs for LLCs entity doesn’t change the workers’ comp math, though it affects the liability coverage you pair it with.
Frequently Asked Questions
How is my workers’ comp premium actually calculated?
The standard NCCI formula is (Annual Payroll ÷ $100) × Class Code Rate × Experience Modification Rate. A $180,000-payroll business at a $1.10 rate, for example, would pay about $1,980 before mod adjustment. Payroll sets exposure, the class code reflects hazard, and your mod adjusts the total based on your claims history versus industry peers.
Which states have the highest and lowest workers’ comp costs?
Per NASI data, employer costs range from roughly $0.35 to $1.83 per $100 of payroll. California and Montana rank among the highest; states like Michigan ($0.57), North Dakota, Indiana, and Arkansas sit near the bottom. The 2024 national average was about $0.90 per $100, down from $0.93 in 2023.
Why does construction cost so much more than office work?
Class code rates track injury risk. A clerical employee rates near $0.13–$0.35 per $100 of payroll, while a roofer can hit $8.24 in Florida or $18.00 in high-hazard examples (FFVA Mutual). In monthly terms, Insureon reports finance customers average $34 versus $179 for construction — a spread driven entirely by expected claim severity and frequency.
Can I shop for a lower rate in a monopolistic state?
No. In Ohio, North Dakota, Washington, and Wyoming, coverage is available only through the state fund, so you can’t compare private carrier quotes. Your main cost controls there are accurate class-code classification and improving your experience modification rate through workplace safety and claims management.
How We Researched This Article
This analysis draws on primary and reputable secondary sources for every figure. State and national cost-per-$100-of-payroll data come from the National Academy of Social Insurance (NASI), which publishes the only comprehensive annual report on workers’ compensation benefits, costs, and coverage across all states, D.C., and federal programs. Market-level trend data — the 2024 net written premium decline, the 86% combined ratio, and the projected ~6% rate decrease into 2025 — comes directly from the National Council on Compensation Insurance (NCCI) 2025 State of the Line materials. Federal context on the $1.25 per $100 historical benchmark and the monopolistic/competitive state-fund structure comes from the Congressional Research Service via Congress.gov, and the U.S. Bureau of Labor Statistics informed the cost-per-hour comparison.
Industry and per-policy premium figures are measured from carrier customer datasets — Insureon, The Hartford, Progressive Commercial, Simply Business, and Kickstand Insurance — rather than modeled. Where these carrier medians differ (for example, $34 to $54 monthly averages), the variation reflects each insurer’s customer mix, and we report the spread rather than a single point. Class-code rates cite Florida Office of Insurance Regulation filings, Texas Department of Insurance methodology, and NCCI-based examples from FFVA Mutual and WorkCompOne. The premium calculations shown are modeled illustrations using the standard NCCI formula, not quotes.
Key limitations: state cost data reflects 2021 filings (the most recent complete NASI state series available), while national averages reflect 2024; carrier monthly figures span 2024–2026. Rates change annually through the filing process, so readers should verify current figures with their state rating bureau. Primary sources consulted include the National Council on Compensation Insurance, the National Academy of Social Insurance, the U.S. Bureau of Labor Statistics, and the Congressional Research Service. Research last conducted August 2026. All figures were verified against named primary sources before publication.