Workers Compensation Insurance for US Businesses

Workers compensation insurance pays for medical treatment and lost wages when an employee is injured or becomes ill because of their job. It’s required by law in 49 states. The structure is no-fault: benefits flow to the injured worker regardless of who caused the incident, and in exchange the employer gets protection from most employee lawsuits related to workplace injuries.

Core Coverage

The Two Benefits That Anchor Every Workers Comp Policy.

Workers comp pays for two things first: medical care for the injured employee, and the wages they lose while they can’t work. Everything else in the policy flows from those two coverages.

Medical treatment and rehabilitation

Covers doctor visits, hospital stays, prescriptions, physical therapy, and medical devices related to a work injury or illness. There’s no deductible for the employee and no cap on medical benefits in most states.

Lost wages and disability

If an employee can’t work due to a covered injury, workers comp replaces roughly two-thirds of their regular wages. Benefits are split into temporary total disability (can’t work at all), temporary partial (can work but at reduced capacity), permanent partial, and permanent total.

Reference

What Workers Comp Covers.

The core benefits under a standard workers compensation policy.

Medical treatment

Part A

What it pays for

Doctor visits, surgery, prescriptions, physical therapy, medical devices

Common example

Employee breaks arm falling from ladder at work site

Lost wages

Part A

What it pays for

~2/3 of average weekly wage during recovery

Common example

Employee misses 8 weeks recovering from back injury

Disability benefits

Part A

What it pays for

Temporary/permanent, partial/total disability payments

Common example

Worker loses partial use of hand from equipment accident

Vocational rehabilitation

Part A

What it pays for

Job retraining, education, job placement services

Common example

Employee can’t return to previous role after injury

Death benefits

Part A

What it pays for

Funeral costs and ongoing payments to dependents

Common example

Fatal workplace accident

What Workers Comp Does Not Cover

Understanding the boundaries of workers comp helps you know where other policies need to fill the gaps.

Injuries outside of work

What you need

Personal health insurance

Injuries while intoxicated

What you need

Not covered

Self-inflicted injuries

What you need

Not covered

Independent contractor injuries

What you need

They need their own coverage

Third-party liability claims

What you need

General liability insurance

Professional errors causing client loss

What you need

Professional liability (E&O)

State Requirements

Who Is Required to Carry Workers Comp?

Workers compensation is mandatory in 48 states plus DC. Most states trigger the requirement with the first W-2 employee. A few situations worth knowing about:

01

Texas: the exception

Texas is the only state where private employers can opt out of workers comp. But opting out means losing the exclusive remedy protection — employees can sue you directly for workplace injuries. Most Texas employers carry it anyway because the litigation exposure without it is worse than the premium.

02

Monopolistic states (ND, OH, WA, WY)

These states require employers to purchase workers comp through the state fund. No private carrier option for Part A. And the state fund does not include Part B (employer liability) — you need a separate stop-gap employer liability policy to cover lawsuits outside the workers comp system.

03

Construction and trades

Stricter rules apply. Some states require workers comp coverage even for sole proprietors in construction. Subcontractor verification requirements are common — if your sub doesn’t have coverage, the general contractor’s policy may pick up the claim and charge it back to you.

Operating across multiple states compounds the requirements. Speak to our team about multi-state workers comp placements.

Premium Formula

How Workers Comp Premiums Are Calculated

Workers comp premium is calculated using a standard formula: (Annual Payroll / $100) × Class Code Rate × EMR. Class codes group businesses by risk; NCCI assigns codes in most states and the rate attached to each code reflects the historical loss experience for that type of work. EMR (Experience Modification Rate) is your company’s claims history compared to peers — 1.0 means average, above 1.0 means worse, below 1.0 means better.

01

Clerical / office work

Indicative rate range

$0.30 – $0.80 per $100

02

Sales / light retail

Indicative rate range

$0.50 – $1.50 per $100

03

Light manufacturing

Indicative rate range

$2.00 – $5.00 per $100

04

General contracting

Indicative rate range

$4.00 – $8.00 per $100

05

Heavy construction trades

Indicative rate range

$6.00 – $12.00 per $100

06

Roofers, steelworkers

Indicative rate range

$10.00 – $18.00+ per $100

Indicative ranges only. Actual class code rates vary by state. Same class code can vary 2x–3x between states because each state sets its own rate structure.

Cost Factors

What Drives Workers Comp Cost?

Six primary factors determine your workers comp premium.

01

Industry and class codes

NCCI or state-assigned codes group businesses by risk. Roofers pay 30x–50x what office workers pay.

02

Total payroll

Premium scales directly with payroll. More employees or higher wages = higher base premium.

03

Claims history (EMR)

EMR above 1.0 = worse than peers. Below 1.0 = better. A 1.2 EMR adds 20% to premium; 0.8 saves 20%.

04

State

Each state sets its own rate structure. Same class code can vary 2x–3x between states.

05

Employee count and job mix

A construction company with 40 field workers and 5 office staff gets different class code splits than a 45-person office.

06

Safety programs

Documented programs, return-to-work procedures, and drug testing can reduce premium through credits or lower EMR over time.

Workers comp is audited annually. The carrier reviews actual payroll at policy expiration and adjusts the premium up or down. If you hired more than expected or reclassified roles, the audit premium can be significant.

We review class code assignments before submission so the audit isn’t a surprise.

Employer Liability Coverage (Part B)

Part A is the statutory workers comp benefit. Part B — employer liability — covers lawsuits that fall outside the workers comp system. These are situations where an employee or third party sues the employer directly.

Example scenarios:

  • An employee’s spouse sues for loss of consortium.
  • An employee alleges gross negligence beyond what workers comp covers.
  • A third party (like a general contractor) sues you after compensating your employee.

Standard limits: $100K / $500K / $100K. $100K per accident / $500K policy limit / $100K per employee for disease. These are the default limits on most policies. Higher limits are available and may be required by contracts.

Monopolistic states (ND, OH, WA, WY): The state fund does not include Part B. You need a separate stop-gap employer liability policy to cover these lawsuits.

How Rosella Places Workers Comp

Rosella is a brokerage. We don’t issue policies as a carrier. We place coverage with carriers, compare the forms, and manage the policy through its life.

Process: The process is fast because the manual work is automated, not because the judgment is rushed.

01

We review your class code assignments

Class codes drive the rate. If employees are misclassified, you’re overpaying or underinsured. We check the codes before submitting to make sure the rating reflects what your employees actually do.

02

We submit across carriers

Your submission goes to admitted carriers and, where needed, state funds or assigned risk pools. We come back with options, not a single take-it-or-leave-it quote. Forms are compared side by side with differences flagged in plain English.

03

After bind, COIs in under two minutes

Certificates of insurance, waivers of subrogation, and additional insured endorsements are generated automatically. No three-day email chain. The system handles the volume so the broker can handle the exceptions.

If you’ve been placed in an assigned risk pool because your current broker didn’t shop the voluntary market, we can usually do better.

Frequently Asked Questions

Get a quote

Tell us about your operation — class codes, payroll, and headcount — and we will come back with real carrier numbers.

GET STARTED

Ready to Place Coverage?

Whether you’re quoting workers comp for the first time or replacing a carrier that isn’t performing, we can move. Standard placements quote within days for most class codes.

Get a QuoteSpeak to Our Team