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How to Get Cheap Workers’ Comp Insurance in California?

The nation’s oldest social insurance program is workers’ compensation insurance. The system sets up a trade-off between workers and their bosses. Workers are entitled to medical care for an injury or illness that occurred while working, but in return, they can’t sue their boss if they get hurt at work. Most states, including California, adopted workers’ compensation insurance policies during the 1920s. 

What is workers’ comp insurance? 

Workers’ comp insurance is insurance coverage employers provide to protect themselves and their employees should an employee get sick or hurt at work. The insurance offers basic benefits, including paying for medical care in the case of an injury or illness. Other benefits the policies pay include temporary disability, permanent disability, supplemental job displacement, return-to-work supplements, and death benefits (to the employee’s spouse and/or family). 

Who needs workers’ comp insurance in California?

In California, all employers are required by law to have workers’ compensation insurance. This is true even if there is only one employee in the business. If any employees get hurt at work or become sick because of work, the employer is required to pay for workers’ compensation benefits. 

If an employee regularly works in California, the laws of that state dictate that workers’ compensation insurance must cover them. That’s even if the business is located elsewhere. Some job industries must carry workers’ compensation insurance even if they are sole proprietors. Roofers, for example, work in a hazardous field and are therefore required to have workers’ compensation insurance even if they work alone.

The number of hours someone works doesn’t affect whether they are entitled to a worker’s comp. Whether they work one hour or 100, every employee is entitled to workers’ compensation coverage paid by their employer.  

How much does workers’ comp insurance cost in California?

The estimated average workers’ compensation cost in California is $2.25 per $100 of payroll (as of 2020). It is the second most expensive in the country, only after New York. The final price is based on a number of considerations. Those include, but may not be limited to: 

  • Payroll
  • Location
  • Number of employees
  • Industry and the risk factors 
  • Coverage limits
  • Claims history

Understanding how workers’ comp insurance is purchased and the factors contributing to the cost of the policies will help you compare rates and find cheap workers’ comp insurance in California. 

Learn more about California workers comp insurance cost details here.

How to get cheap workers’ comp insurance in California?

California’s workers’ compensation rates are some of the highest in the entire country. The high cost of living in the state translates to higher insurance premiums. If you own a business in California, you are likely wondering how you can save money on the cost of workers’ compensation insurance. Here are some tips for saving money and getting cheap workers’ comp insurance in California. 

Shop around and get quotes from multiple companies

In California, you can buy workers comp insurance from private companies. That makes it easy for you to shop around to compare several quotes to find the cheapest one for your company. As long as the company is licensed to sell insurance, you can purchase your workers’ comp insurance from any company.

As you may know, comparing several quotes is the only way for you to find the cheapest one for you since different insurance companies assess risks differently. Working with a good broker like Simply Business, CoverWallet, or Smart Financial, is a good way to get several quotes in one place conveniently. Some insurance companies offer quotes online, which also makes it easier to get and compare quotes. We recommend getting a quote online from THREE or biBERK. It only takes less than 10 minutes to get a quote online on their websites.

Recheck classification codes

There are numeric codes used nationwide to categorize employees and industries based on relative risk assessments. Ensure you are using the correct codes when you classify your employees. Using a wrong code will increase your premiums significantly and insurance companies may refuse your claims later on.

Consider the effect of payroll on workers’ compensation costs

When your payroll increases, so do your workers’ compensation costs. Working with a contractor might make more sense than hiring new employees since companies are not required to provide workers comp insurance to contractors. Learn more about workers comp insurance for independent contractors

Look at coverage requirements for non-employees

Directors or officers must be included in workers’ comp coverages. Sole proprietors are excluded from policies by default. 

Ensure payroll is accurately calculated

Accurately calculating payroll based on class codes is important to have the right premium. Payroll is an important component in calculating worker’s comp insurance premiums.

Consider “pay-as-you-go” insurance or other alternative payment options

Using a pay-as-you-go method means less out-of-pocket upfront, and the rate is often more manageable. It actually helps calculate the premiums more accurately since premiums largely depend on each month’s exact payroll. Even if you pay upfront for the entire 6 months or 1 year, insurance companies usually have to reconcile the final premiums based on the e

Work with your agent and be sure to ask for discounts

Often, your insurance agent can find discounts or other ways to save on your rates. Always remember to ask for discounts regardless if you work with an agent or a broker. Ask for all discount programs that the companies offer, even if you are not qualified now. It will give you a good idea on how to become qualified in the next 6 months or 1 year when you renew the policy.

Maintain appropriate workplace safety practices and procedures in order to prevent injuries and claims

Keeping a safe work environment greatly affects the amount you’ll pay for workers’ compensation insurance. At the end of the day, your rates will be impacted significantly if your employees regularly get into accidents at work and have to file for workers comp claims. If you have a clean record without filing claims, your rates will gradually decrease.  

Where to buy the cheapest workers’ comp insurance in California?  

In California, you can buy a workers’ compensation policy in one of three ways. 

  1. You buy it from a private insurer. Many insurance providers who provide business insurance offer workers’ compensation policies. Often, you can get a quote or purchase the policy online.
  2. You can buy it from the California state fund. StateFund First is where you find information on buying workers’ compensation insurance from the state fund in California.
  3. You have the option to self-insure your business against workers’ compensation claims. If you meet specified requirements, including having at least years in business, you can apply to the Office of Self-Insurance Plans for approval to self-insure your business. 

If you are a small company, the best way to buy the cheapest workers comp insurance is to work with a good broker that can help you get several quotes online to compare and find the cheapest one for you. This. is the only way to make sure you get the cheapest rates for your company. We recommend the following brokers: Simply Business, CoverWallet, and Smart Financial.

Industries with the cheapest workers comp insurance in California

As we know, workers comp insurance rates depend on the class codes of the industries. Some industries have more expensive workers comp insurance rates than others. They also vary by states. Below are the 3 industries with the cheapest workers comp insurance rates in California.

Below are the three least expensive industries to insure and their class codes in California are:

Class codes Industries Workers comp insurance rates in California 
8810 Clerical- Office Employee$0.28 – $0.99 per $100 payroll
8742Sales Professional$0.36 – $1.35 per $100 payroll
8868 Religious Organization- Church- Temple$0.6 – $2.74 per $100 payroll

How does workers’ comp insurance work in California? 

The state of California has enacted laws to ensure the process of filing for workers’ compensation. The laws have a two-fold goal: to ensure that the worker receives benefits quickly and without hassle. The employer, in turn, is protected from lengthy, expensive legal procedures and lost productivity due to litigation. 

Typically, a workers’ comp policy includes employer’s liability insurance which can help cover the legal costs if an employee points the finger of blame at the employer. The exclusive remedy clause that is incorporated into most workers’ comp policies keeps the employee from suing the employer if they choose to accept payment through their workers’ compensation benefits. 

The California Department of Industrial Relations is the regulatory body governing workers’ compensation insurance. If employers or workers in California need information regarding the workers’ compensation regulations, they can find information through the Division of Workers’ Compensation (DWC). 

The takeaway

In California, every employer must provide workers’ compensation insurance. The rates are determined based on a variety of factors. While there is really no cheap workers’ comp insurance in California, you can get the policies at a better rate. There are ways you can save money on your premiums.

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