Average Cost of Workers Comp Insurance by State 2026

Affiliate disclosure: Dareable earns a commission when you purchase coverage through links on this page. This does not affect the data or methodology in this study.

Workers compensation costs vary dramatically by state. A business with $500,000 in annual payroll pays $12,600 per year in Hawaii and $2,500 per year in North Dakota for the same coverage. The 5x cost difference is not random: it reflects differences in medical costs, litigation environments, regulatory systems, and competition among insurers in each market.

This study uses the Oregon Department of Consumer and Business Services 2024 Premium Rate Ranking Study (Report 24-2083), released June 2025, as its primary data source. The Oregon DCBS study is a government-published, biennial comparison of workers comp rates across all 51 jurisdictions (50 states plus DC) using a standardized methodology that controls for industry mix. It is the only comprehensive state-by-state comparison that prevents states with more dangerous industries from appearing artificially expensive.

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Key Findings

1. Hawaii is the most expensive state at $2.52 per $100 of payroll - 231% of the national median.

2. North Dakota is the least expensive at $0.50 per $100 of payroll - less than half the national median.

3. The national median is $1.09 per $100 of payroll. Half of US states fall below this threshold.

4. California is trending upward. The California Dept. of Insurance adopted a pure premium rate increase effective September 2025. California's projected claims combined ratio for 2024 was 123%, the highest in roughly 15 years.

5. Industry classification matters more than state for most employers. A roofer pays approximately 250 times more per $100 of payroll than a clerical worker, regardless of which state they operate in.

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State-by-State Workers Comp Rates (2024)

Rates are index rates per $100 of payroll from the Oregon DCBS 2024 Premium Rate Ranking Study. The study applies a standardized industry mix (Oregon's 50 highest-cost industry classes) to each state's rates, producing apples-to-apples comparisons.

The national median is $1.09 (Georgia, ranked 26th).

Rank	State	Rate / $100 Payroll	Vs. Median	Notes
1	Hawaii	$2.52	+131%
2	New Jersey	$2.16	+98%
3	New York	$1.98	+82%
4	California	$1.86	+70%	Rate increasing effective Sept 2025
5	Vermont	$1.60	+47%
6	Connecticut	$1.48	+35%
7	Wisconsin	$1.42	+30%
8	Wyoming	$1.41	+29%	Monopolistic state fund only
9	Louisiana	$1.41	+29%
10	Rhode Island	$1.38	+27%
11	Maine	$1.37	+26%
12	Washington	$1.35	+23%	Monopolistic state fund only
13	Illinois	$1.34	+23%
14	Montana	$1.34	+23%
15	Oklahoma	$1.33	+22%
16	Missouri	$1.31	+20%
17	Minnesota	$1.25	+14%
18	New Hampshire	$1.22	+12%
19	Iowa	$1.21	+11%
20	Alaska	$1.16	+6%
21	Pennsylvania	$1.14	+5%
22	South Dakota	$1.13	+4%
23	Nebraska	$1.12	+3%
24	Alabama	$1.11	+2%
25	Idaho	$1.10	+1%
26	Georgia	$1.09	100% (median)
27	New Mexico	$1.05	-4%
28	Colorado	$1.05	-4%
29	South Carolina	$1.03	-6%
30	Florida	$1.00	-8%
31	Massachusetts	$0.97	-11%
32	Delaware	$0.97	-11%
33	North Carolina	$0.95	-13%
34	Mississippi	$0.94	-14%
35	Kansas	$0.91	-17%
36	Michigan	$0.90	-18%
37	Maryland	$0.89	-18%
38	Oregon	$0.89	-18%
39	Tennessee	$0.80	-27%
40	Texas	$0.78	-28%	Workers comp not mandatory for most private employers
41	Kentucky	$0.76	-30%
42	Nevada	$0.73	-33%
43	District of Columbia	$0.73	-33%
44	Virginia	$0.73	-33%
45	Indiana	$0.71	-35%
46	Arizona	$0.70	-36%
47	Ohio	$0.68	-38%	Monopolistic state fund only
48	Utah	$0.63	-42%
49	West Virginia	$0.54	-50%
50	Arkansas	$0.53	-51%
51	North Dakota	$0.50	-54%	Monopolistic state fund only

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Most Expensive States: What Drives the Cost

Hawaii ($2.52 per $100 of payroll)

Hawaii has been the most expensive workers comp market in the US for multiple years. Three factors compound: a geographically isolated medical market with above-average healthcare costs, strong worker protections built into state law, and a claims system where medical treatment costs are among the highest in the country. An employer with $500,000 in payroll pays an estimated $12,600 per year in workers comp premiums in Hawaii.

New Jersey ($2.16 per $100 of payroll)

New Jersey's high workers comp cost reflects its litigation environment, high medical costs driven by a dense healthcare market, and relatively high wage levels (since premium scales with payroll). New Jersey employers pay nearly double the national median.

New York ($1.98 per $100 of payroll)

New York's workers comp system is one of the most complex in the US. High attorney involvement in claims, elevated medical costs in the New York metro area, and a regulatory structure that has been the subject of repeated reform efforts all contribute to above-median rates. Construction employers in New York face some of the highest workers comp rates in the country for that classification.

California ($1.86 per $100 of payroll - and rising)

California's workers comp market is large and increasingly stressed. The California Department of Insurance adopted an advisory pure premium rate increase effective September 2025. The 2024 accident year projected combined ratio was approximately 123%, the highest in roughly 15 years. Litigation costs and medical-legal expenses have been rising. California employers should expect rates to continue moving upward in 2026 and beyond.

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Least Expensive States: What Drives Low Costs

North Dakota ($0.50 per $100 of payroll)

North Dakota has the cheapest workers comp in the country despite being a monopolistic state (meaning private carriers cannot write workers comp there and all coverage goes through the state-run ND Workforce Safety and Insurance fund). The state fund has maintained strong safety programs, low litigation rates, and consistent claims management since the 1990s. An employer with $500,000 in payroll pays an estimated $2,500 per year.

Arkansas ($0.53 per $100 of payroll) and West Virginia ($0.54 per $100 of payroll)

Both states benefit from low medical costs and employer-favorable legal environments. West Virginia is a notable case: the state transitioned from a state-only fund to a private market in 2008, and competition among carriers has driven rates down significantly since.

Utah ($0.63) and Indiana ($0.71)

Both states combine efficient state insurance oversight with low claims frequency and below-average medical costs. Indiana's employer defenses against workers comp litigation are among the strongest in the country.

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Monopolistic States: What Employers Need to Know

Four states require all employers to purchase workers comp through a state-run fund. Private insurers cannot sell workers comp coverage in these states.

State	State Fund	2024 Rate	Key Detail
North Dakota	ND Workforce Safety and Insurance (WSI)	$0.50	Cheapest in the country
Ohio	Ohio Bureau of Workers' Compensation (BWC)	$0.68	July 2025 rate cut to $0.68 (was $0.83); now lowest rates in 65+ years
Washington	Dept. of Labor and Industries (L&I)	$1.35	Unique: rates set per hour worked; employees pay approximately 24% of premium
Wyoming	Dept. of Workforce Services	$1.41	Higher cost due to state's hazardous industry profile

Practical implication for employers: If you operate in any of these four states, you cannot shop competitive rates among private insurers. Your workers comp cost is determined by the state fund. Multi-state employers also need to confirm that their workers comp policy includes stop-gap (employers liability) coverage for these states, since standard workers comp policies from private carriers do not cover monopolistic state operations.

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Texas: The Opt-Out Exception

Texas is the only US state where workers comp is not mandatory for most private employers. Employers who choose not to carry workers comp are called "non-subscribers."

Approximately 28% of Texas private employers are currently non-subscribers. This is a strategic business decision, not simply an oversight: non-subscribers can design their own occupational injury benefit plans, sometimes at lower cost. However, non-subscribers lose common law defenses in personal injury lawsuits brought by injured employees. An injured employee of a non-subscribing employer can sue for negligence without the workers comp system's exclusive remedy protection.

Texas's workers comp index rate, where employers do carry it, is $0.78 per $100 of payroll - below the national median and accessible from competitive private carriers.

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Industry Classification: The Bigger Variable

For most small businesses, the industry classification (job type) affects workers comp cost more than the state. Every job type has a class code that determines the base rate before any state multiplier is applied.

Roofing (Class Code 5552): The national average manual rate for roofing is approximately $28 to $30 per $100 of payroll. In California, roofing rates can reach $45 to $80 per $100. A roofing company with $500,000 in payroll in Texas at $20 per $100 pays an estimated $100,000 per year in workers comp.

Clerical Workers (Class Code 8810): The national average for office and clerical work is approximately $0.11 per $100 of payroll. The gap between a roofer and a clerical worker is roughly 250 to 1 nationally.

The practical implication: if your business employs both field workers and office staff, properly classifying each employee by their actual work type (not just their title) can significantly reduce your annual premium.

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How to Use This Data

For employers comparing states: The rates in this study are index rates representing the regulatory cost environment in each state. They are the baseline before experience modification factors (which reward good safety records with lower rates over time) and carrier competition adjustments.

For employers in a high-cost state: Your experience modifier is within your control. A business with three to five years of clean loss history and a sub-1.0 experience modifier earns a credit that can reduce premium by 20 to 40 percent in most states.

For employers shopping coverage: Get quotes from multiple carriers where private markets operate. Rates among competing carriers can vary 15 to 30 percent for the same classification in the same state. For help finding competitive rates, see our reviews of best workers comp insurance for small business and best workers comp insurance for contractors.

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Methodology

Primary data source: Oregon Department of Consumer and Business Services 2024 Premium Rate Ranking Study (Report 24-2083), released June 2025. This is a biennial government-published study that has compared workers comp rates across all 51 US jurisdictions since 1986.

How the Oregon DCBS study works: The study applies a standardized set of 50 high-cost industry classes (based on Oregon workers comp claim costs) to each state's filed rates. This controls for industry mix: a state with a large logging or oil extraction industry does not appear artificially expensive simply because of its economic profile. The result is a true regulatory cost comparison that reflects state law, court environment, and insurance market structure.

What the rates represent: Index rates per $100 of payroll. These are manual (base) rates before experience modification, premium discounts, or carrier-specific pricing. Individual employer premiums will differ based on payroll size, experience modifier, and carrier competition.

Limitations:

• Rates reflect January 1, 2024 effective dates. California rates are in transition following the September 2025 CDI filing.
• Monopolistic state rates are included but are not directly comparable because employers in those states cannot access private market competition.
• NASI comprehensive cost data lags by approximately 2 years; the most recent complete dataset is 2022 data published November 2024.

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Frequently Asked Questions

What is the national average workers comp rate per $100 of payroll?

The national median is $1.09 per $100 of payroll based on the 2024 Oregon DCBS study. The average across all states, weighted by premium volume, is approximately $0.90 to $1.03 depending on the methodology and year. Use the median ($1.09) as your benchmark for whether your state is above or below average.

How much does workers comp cost for a 5-person construction business?

At the national median of $1.09 per $100 of payroll, a 5-person construction company with $350,000 in annual payroll would pay approximately $3,815 per year for a clerical classification. However, construction workers fall under higher-risk class codes ($10 to $30 per $100 depending on trade), so actual workers comp for a 5-person construction crew with $350,000 in payroll is more likely $12,000 to $18,000 per year depending on state and classification.

Why do workers comp rates vary so much between states?

Five primary factors drive cost differences between states: medical care costs (which vary significantly by region), litigation frequency and awards (states with more plaintiff-friendly legal environments have higher rates), regulatory structure (how the state oversees the system and resolves disputes), industry concentration (states with more hazardous industries have higher average claims), and carrier competition (more competing carriers generally produces lower rates).

Can I reduce my workers comp premium if I'm in a high-cost state?

Yes. Three mechanisms reduce workers comp cost regardless of state: (1) experience modification factor - your EMR falls below 1.0 with clean loss history over 3 to 5 years, producing a credit modifier that reduces your premium; (2) accurate classification - ensuring employees are classified by their actual job function rather than a general category can reduce rates; (3) safety programs - documented OSHA training and fall protection programs may qualify for safety credit programs at some carriers.

What is an experience modifier and how does it affect my rate?

The experience modifier (also called EMR, e-mod, or experience rating) compares your actual claims history to the expected claims for a business of your size and type. A modifier below 1.0 means you have better-than-average loss history and receive a premium credit. A modifier above 1.0 means above-average losses and a surcharge. Most modifiers range from 0.70 to 1.50. Moving from a 1.20 modifier to a 0.85 modifier can reduce annual premium by 30 percent or more.

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Sources

• Oregon Department of Consumer and Business Services, 2024 Workers Compensation Premium Rate Ranking Study (Report 24-2083), June 2025: oregon.gov/DCBS
• National Academy of Social Insurance, Workers' Compensation Benefits, Costs and Coverage: 2022 Data, November 2024: nasi.org
• NCCI 2025 State of the Line Guide: ncci.com
• National Association of Insurance Commissioners 2024 Market Share Data: content.naic.org
• California Department of Insurance Advisory Pure Premium Rate Filing, 2025: insurance.ca.gov
• Washington Department of Labor and Industries 2026 Rate Notice: lni.wa.gov
• Ohio Bureau of Workers' Compensation 2025 rate data: bwc.ohio.gov
• Texas Department of Insurance workers comp non-subscriber statistics: tdi.texas.gov
• Bureau of Labor Statistics Occupational Employment and Wage Statistics: bls.gov/oes