Workers compensation insurance protects your employees if they suffer a work-related illness or injury. Furthermore, almost every state requires workers compensation insurance, and many of them require it even if you only have one employee. The only exception is Texas, where workers compensation insurance is optional. Different states have slightly different rules, so it’s important to know your state’s requirements. It can be a big expense for your company, consider the following tactics to find cheap workers compensation insurance.
- Compare Quotes to Find Cheap Workers Compensation Insurance
- Get Cheap Workers Compensation Insurance Through Several Savings Programs
- Find Cheaper Workers Compensation Insurance Through State Fund Programs
- Consider Pay As You Go Workers Compensation Insurance
- How Much does Workers Compensation Insurance Cost?
- What Happens If You Don’t Have Any Workers Compensation Insurance?
Compare Quotes to Find Cheap Workers Compensation Insurance
It is always a good idea to compare quotes from several providers to find the cheapest workers compensation insurance. Some companies make it easy to get quotes online, some require you to talk to an agent. We recommend the following companies for your online quote comparison:
- The Hartford: The Hartford is a market leader in small business insurance with hundreds of years of experience and has stellar financial strength. You can be assured that they will have the resources to pay the claims when the time comes.
- Hiscox: Hiscox is focused on providing business insurance to small companies completely digitally. They offer several digital capabilities to make it easy for small business owners to buy a policy online.
- Progressive Commercial: A household name for car insurance, Progressive has invested significantly to build their small business insurance. It is easy for you to get a quote online with them.
- Pie: A new insuretech startup focused 100% on workers compensation insurance for small businesses, Pie claims that its quotes are at least 20% cheaper than others. It is very easy to get a quote online on their website.
- BiBERK: A subsidiary of Berkshire Hathaway company, which also owns Geico, another household name for car insurance, biBERK offers small business insurance completely online.
The following quote is for workers compensation insurance for a coffee shop with five full-time employees in either Texas or California. We said we had $150,000 in annual payroll, and these quotes reflected $1 million each accident, $1 million per policy and $1 million per employee limit.
We are able to get quotes online from Pie and BiBERK without providing much information. Other companies do offer workers compensation quotes online, but they ask for your federal EIN number, or your social security number and therefore we were unable to get a quote.
As you can see, the differences in annual rates for a business based in California vs. Texas is significant.
| California | Texas | |
| Pie | $3,863 | $1,467 |
| Biberk | $5,899 | $1,274 |
While it is true that Pie’s quotes are much cheaper than BiBERK’s in California, it is slightly more expensive in Texas. Make sure you compare quotes at least from 3-5 companies or with a digital broker that can provide quotes of several companies like CoverWallet or Simply Business or InsurePro to find the cheapest one
Get Cheap Workers Compensation Insurance Through Several Savings Programs
You might be able to save on workers compensation insurance by applying for one or several savings programs below:
- Group insurance: if you’re a member of a professional organization, you may be able to get a group rate on your workers compensation insurance.
- Identify potential hazards and fix them. Once you fix them, make sure you notify your insurance agent (if you have one) or report it to your company. Ask for annual reviews.
- Invest in safety education. According to Safety and Health, for every dollar you spend on injury prevention, you’ll earn a ROI of between $2 and $6 dollars. If you’re wondering how to start a safety program, OSHA (Occupational Safety and Health Administration) is a good place to start.
- Consider drug testing. It should come as no surprise that workers who show up under the influence of drugs or alcohol are more likely to injure themselves or others.
- Check classification levels. Every employee type is assigned a classification level, and each level is assigned a rate that reflects the level of risk this type of job has. Obviously, a secretary is exposed to much less risk than a construction worker, even if they work at the same company. Make sure everyone is classified accurately.
- Ask about state programs. Some states have incentives for starting safety programs, and others have incentives for encouraging a drug-free workplace. Every state is different.
>>MORE: What are Workers Compensation Insurance Requirements by States?
Find Cheaper Workers Compensation Insurance Through State Fund Programs
State funded workers compensation programs provide coverage to employers using government funding. Some states are monopolistic, meaning there is no private workers compensation insurance available at all, so you’ll have to purchase your insurance through the state. If you employee someone who lives out of state, you’ll have to provide workers compensation insurance from the state in which they live.
Monopolistic states are:
- Ohio
- Wyoming
- North Dakota
- Washington
Other states allow you to choose your insurance from either the state fund or a private insurance company. You can compare the state fund with private insurance to get the best deal, although usually the state fund will offer a better price.
Consider Pay As You Go Workers Compensation Insurance
Pay as you go workers compensation insurance might not save you any money, but it can make it easier to pay for it. It’s like a payment plan, only for workers compensation insurance. Rather than trying to pay for your workers comp in one lump sum, you can make payments every time you run payroll.
Another advantage of pay as you go insurance is that while most workers compensation insurance is an estimate based on payroll, pay as you go is an accurate reflection of your payroll. If you hire someone or fire three people in the same month, your monthly payments will reflect that.
How Much does Workers Compensation Insurance Cost?
How much you pay for workers compensation insurance varies according to:
- Which state you live in
- What type of work
- Number of employees
- Claims history
- Size of business
Workers comp is calculated per every $100 of payroll, so the more you pay out in payroll, the more you’ll pay in insurance. According to the National Academy of Social Insurance, workers comp rates range from .74 per $100 in Massachusetts and $2.32 per $100 for Alaska.
Costs vary by providers. Make sure you shop around with at least 3 companies or with a digital broker like CoverWallet to compare several quotes to get the cheapest one for your company.
>>MORE: How Much does Workers’ Compensation Insurance Cost?
What Happens If You Don’t Have Any Workers Compensation Insurance?
Unless you live in Texas, where it’s not required, you would face penalties or jail time for not having workers compensation insurance. Fines vary by state. In Illinois, California, Pennsylvania, Massachusetts, and Michigan you could face jail time.
If you somehow get away with not having workers compensation insurance and an employee injures themselves on the job, you would be responsible for any lawsuits your employee files. They are likely to file suit to get their medical bills and lost wages covered. The moral of the story is: get workers compensation insurance, even if you do live in Texas.
Last Thoughts
Not having workers compensation insurance is far more expensive than paying for it. It’s required in almost every state, and many require it if you have even one employee. If you’re really strapped for cash, look into either state funded programs or pay as you go insurance. Don’t skip this insurance.