Business
Workers' Comp Insurance: What It Costs and What to Check
Published September 24, 2026 · Last updated October 1, 2026
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The short answer
Small businesses pay about $54 a month for workers' comp, or about $643 a year. It pays medical bills and lost pay if a worker gets hurt on the job. Most states require it once you have employees.
Your price is mostly based on your payroll and the kind of work your people do.
Thimble is a participating provider that offers workers' compensation coverageSponsored online for small businesses.
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What does workers' comp cover?
Medical bills for a work injury or illness.
Lost pay while the worker recovers and can't work.
Rehab and retraining if they need it to get back to work.
Death benefits for the family if a worker dies from a work injury.
Most policies also include employers' liability. It helps if a worker sues you over an injury, even with workers' comp in place.
How much is workers' comp insurance?
Price range
Small businesses pay about $54 a month on average, or about $643 a year.
Not a quote or an offer. Your price comes from the insurance company. Source: Insureon, 2026 (based on its small business customers).
How the price is figured
Your price is based on three things:
- Your payroll. The rate is a dollar amount for every $100 you pay workers.
- The kind of work. Each job has a class code. Office work costs much less to cover than roofing.
- Your claims history. Fewer injuries over time can lower your price.
Where you're located and your number of workers matter too.
Here's how the math works, with made-up numbers. Say your rate is $1.50 per $100 of payroll, and you pay $100,000 a year in wages. That's 1,000 units of $100, times $1.50, or $1,500 a year before any adjustments.
Is workers' comp required?
In most states, yes, once you have employees. But the rules differ by state and by how many workers you have. Some states require it with your first employee. Others start at a higher number. Texas lets most private employers choose.
If you're a sole owner with no employees, you may not need it. Some clients still ask for it in their contracts.
The year-end audit
Your first price is based on a guess of your payroll. At the end of the year, the insurer checks your real payroll. This is called an audit. If you paid people more than you guessed, you'll owe more. If you paid less, you may get money back.
Pay-as-you-go plans tie your payments to each payroll, so the audit is less of a surprise.
Employees vs. contractors
Calling workers "contractors" to skip coverage can lead to big fines if they're really employees. The rules for who counts as an employee vary by state. If you're not sure, check with your state's labor or workers' comp office.
What to ask before you choose
- "Does my state require this for my business?"
- "Are my job codes right?" A wrong code can mean paying too much, or a surprise bill later.
- "How does the year-end audit work?"
- "Do you offer pay-as-you-go?"
- "Do you help with safety programs?" Fewer injuries means lower prices over time.
Keep reading
Pair it with general liability insurance and a business owner's policy. Running payroll yourself? Compare payroll services.
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