Workers' compensation insurance costs vary substantially from one state to another. According to the latest national premium-rate comparison published by the Oregon Department of Consumer and Business Services, Hawaii, New Jersey, New York, California, and Vermont have the highest workers' compensation premium index rates in the country. North Dakota, Arkansas, West Virginia, Utah, and Ohio have the lowest.
For injured workers, however, these rankings require some context. A high insurance-cost ranking does not necessarily mean that workers in that state receive more generous benefits, just as a low ranking does not necessarily mean that workers have fewer legal protections. Each state has its own workers' compensation laws, benefit rules, medical requirements, and claim procedures. Understanding what the rankings measure—and what they do not—provides a clearer picture of how workers' compensation systems differ across the United States.
Key Takeaways: Workers' Compensation Insurance Costs by State
- Hawaii has the nation's highest workers' compensation premium index rate, followed by New Jersey, New York, California, and Vermont, according to the latest Oregon DCBS national comparison.
- North Dakota has the lowest premium index rate, followed by Arkansas, West Virginia, Utah, and Ohio.
- The rankings compare standardized premium rates, not the actual amount every employer pays for insurance.
- Workers' compensation costs vary because state systems differ in areas such as benefit requirements, medical costs, workplace injury experience, insurance-market structure, taxes, assessments, and rating rules.
- A state's premium ranking does not tell an injured worker how much compensation they will receive. Disability benefits, medical coverage, eligibility standards, and claim procedures are determined separately under each state's workers' compensation laws.
Which States Have the Highest Workers' Compensation Insurance Costs?
The Oregon Department of Consumer and Business Services' 2024 Workers' Compensation Premium Rate Ranking provides one of the most widely used comparisons of workers' compensation premium rates across all 50 states and Washington, D.C.
The five states with the highest premium index rates are:
- Hawaii: $2.52 per $100 of payroll
- New Jersey: $2.16 per $100 of payroll
- New York: $1.98 per $100 of payroll
- California: $1.86 per $100 of payroll
- Vermont: $1.60 per $100 of payroll
For comparison, the study median is $1.09 per $100 of payroll. Hawaii's index rate is approximately 231% of that median, while New Jersey's is approximately 198%.
These figures do not mean that every Hawaii employer actually pays $2.52 for every $100 in payroll or that every New Jersey employer pays $2.16. The Oregon study creates a standardized index so that states with very different industries and workforces can be compared on a more consistent basis.
Which States Have the Lowest Workers' Compensation Insurance Costs?
At the other end of the ranking, the five lowest premium index rates are:
- North Dakota: $0.50 per $100 of payroll
- Arkansas: $0.53 per $100 of payroll
- West Virginia: $0.54 per $100 of payroll
- Utah: $0.63 per $100 of payroll
- Ohio: $0.68 per $100 of payroll
Indiana, Arizona, Virginia, the District of Columbia, and Nevada also fall near the lower end of the ranking.
There is no single legal rule or insurance model that explains why these states have lower index rates. Their workers' compensation systems are not identical. North Dakota, for example, operates an exclusive state workers' compensation insurance system through Workforce Safety & Insurance, while other low-cost states use different insurance-market structures.
The rankings are therefore better understood as a comparison of the overall premium environment in each jurisdiction rather than evidence that one particular policy causes workers' compensation insurance to be inexpensive.
What Does a Workers' Compensation "Premium Index Rate" Mean?
The Oregon study is designed to compare states whose economies and workforces can look very different.
A state with a large construction or manufacturing sector, for example, naturally has a different workplace risk profile from a state with a higher concentration of office-based industries. Simply comparing the average premiums employers actually pay would therefore provide a distorted picture.
To make the comparison more meaningful, Oregon uses a common group of workers' compensation classifications and applies the same weighting methodology across jurisdictions. The resulting premium index rate represents a standardized estimate expressed in dollars per $100 of payroll.
That allows researchers to compare relative premium-rate levels across states.
It is important, however, not to confuse the index with an individual employer's insurance bill. Actual workers' compensation premiums may be affected by factors that the national comparison cannot fully account for, including:
- The employer's industry and applicable classification codes
- Total payroll
- Claims experience
- Experience modification factors
- Available credits or discounts
- Deductibles
- Insurer pricing
- State taxes and assessments
- Other rating adjustments permitted by state law
The Oregon study itself cautions that not all of these employer-specific factors can be incorporated into a nationwide comparison.
Why Do Workers' Compensation Insurance Costs Vary So Much by State?
Workers' compensation is primarily governed at the state level. As a result, there is no single national workers' compensation system establishing identical benefits, medical rules, insurance rates, or claim procedures for everyone.
Several factors can contribute to differences in workers' compensation costs.
Benefit requirements vary by state. States establish their own rules governing wage-replacement benefits, permanent disability benefits, death benefits, medical treatment, and other forms of compensation available after a work injury.
Medical costs differ. Workers' compensation systems use different rules for paying healthcare providers who treat occupational injuries. Medical prices, treatment utilization, injury severity, and reimbursement rules can all affect overall claim costs.
Workplace injuries differ in frequency and severity. The number and cost of claims within a jurisdiction can influence the expected losses insurers or state systems must account for.
Insurance markets differ. Most states allow private workers' compensation insurers to compete for business, while a small number use exclusive state-operated insurance systems. States also differ in how rates, loss costs, and insurer expenses are regulated.
Taxes and assessments vary. Workers' compensation premiums can include state-specific assessments or other charges used to support the administration of the system or related programs.
These factors interact with one another, which is why a state's place in a national ranking generally cannot be traced to one statute, one benefit, or one regulatory choice.
Do Higher Workers' Compensation Insurance Costs Mean Better Benefits for Injured Workers?
Not necessarily.
This is one of the most important limitations of the rankings. The Oregon comparison measures premium rates, not the quality or generosity of benefits available to injured employees.
Workers' compensation insurance premiums reflect the expected costs associated with operating the system, which can include medical and disability claims as well as insurer expenses, taxes, assessments, and other allowed costs. That does not mean the money is distributed directly to injured workers in proportion to a state's premium ranking.
The benefits available after an injury are determined under the law of the applicable state. Depending on the jurisdiction and the circumstances of the claim, those benefits may include:
- Medical treatment for the work-related injury
- Temporary disability or wage-replacement benefits
- Permanent partial or permanent total disability benefits
- Vocational or return-to-work assistance in qualifying cases
- Death benefits for eligible dependents after a fatal workplace injury
The amount, duration, eligibility requirements, and procedures associated with those benefits vary considerably.
For that reason, a worker in a relatively high-premium state should not assume that a claim will automatically produce greater compensation. Likewise, an injured worker in a lower-premium state should not assume that no meaningful benefits are available.
The specific workers' compensation benefits available after an injury depend on the law governing the individual claim.
How Are Workers' Compensation Premiums Generally Calculated?
Although state rules differ, workers' compensation premiums commonly begin with two basic pieces of information: payroll and occupational classification.
Businesses and their operations are assigned to workers' compensation classifications according to applicable classification rules. Different classifications reflect different levels of expected occupational risk. A roofing or construction classification, for example, will typically carry a higher underlying rate than an office-based classification.
A simplified premium calculation often begins by dividing the applicable payroll by 100 and multiplying it by the rate for the relevant classification.
The calculation may then be adjusted by other factors.
One of the most common is the experience modification factor, often called an experience mod or E-Mod. For employers subject to experience rating, this factor compares the employer's historical losses with the losses expected for comparable businesses.
A modification below 1.00 generally reduces the experience-rated portion of premium, while a modification above 1.00 generally increases it.
This helps explain why two employers in the same state and even the same industry may ultimately pay different premiums despite operating under the same workers' compensation system.
Does an Employer's Workers' Compensation Premium Affect an Injured Worker's Claim?
Usually, the employer's premium rate is not what determines whether an individual worker qualifies for benefits.
A workers' compensation claim instead turns on the state's eligibility requirements and the facts surrounding the injury or occupational illness. Issues may include whether the worker is covered by the workers' compensation system, whether the condition arose out of or occurred in the course of employment, the extent of the disability, and what medical treatment is reasonably necessary under applicable law.
Similarly, an employer's individual claims history or experience modification does not determine the amount an injured employee is legally entitled to receive.
Workers should therefore be cautious about drawing conclusions from an employer's insurance costs. The rights that matter after an injury come from the workers' compensation laws that apply to the claim.
Does Every State Require Employers to Carry Workers' Compensation Insurance?
Workers' compensation coverage requirements vary by state.
Most states require employers meeting specified criteria to maintain workers' compensation coverage, although exemptions and thresholds differ. Some jurisdictions allow coverage through private insurers, while others use state-operated systems. Qualifying employers in certain states may also be permitted to self-insure.
An employer's failure to obtain legally required coverage does not necessarily mean that an injured employee has no options. Depending on the jurisdiction, special uninsured-employer funds, penalties, or other remedies may apply. Learn more about what can happen when an employer does not have required workers' compensation insurance.
Can Independent Contractors Receive Workers' Compensation Benefits?
Calling a worker an independent contractor does not automatically determine whether that person is excluded from workers' compensation coverage.
States use different legal tests to distinguish employees from independent contractors, and the substance of the working relationship may matter more than the label used in a contract. Factors can include the degree of control over the work, the nature of the worker's business, payment arrangements, and other state-specific considerations.
A worker who has been classified as an independent contractor but is injured on the job should not automatically assume that workers' compensation is unavailable. More information is available in our guide to whether independent contractors can receive workers' compensation benefits.
What Should an Injured Worker Take Away From State Premium Rankings?
The national premium rankings are useful for understanding how dramatically the cost of workers' compensation insurance can differ across the country. They can also illustrate how much state law and state-specific insurance systems matter.
But the rankings have limited value for predicting what happens in an individual workers' compensation case.
For someone who has been hurt at work, the more important questions are:
- Does the applicable workers' compensation law cover the injury?
- What medical treatment is available?
- Are temporary disability benefits available while the worker cannot perform their regular job?
- Could the worker qualify for permanent disability benefits?
- What deadlines apply to reporting the injury or filing a claim?
- What happens if the employer or insurance carrier disputes the claim?
Those answers come from the law governing the worker's particular claim—not from where the state appears on a national premium-cost ranking.
Need Help With a Workers' Compensation Claim? Brandon J. Broderick, Attorney at Law, Is Here for You
A work injury can affect your health, your income, and your ability to support yourself and your family. Understanding what workers' compensation benefits are available—and what to do when an employer or insurance carrier disputes your claim—can be difficult while you are also trying to recover.
At Brandon J. Broderick, Attorney at Law, we help injured workers understand their legal rights and pursue the workers' compensation benefits available under the law.
Our team is available 24/7 to listen to your story, review the circumstances of your work injury, and explain your legal options. Contact us today for a free, no-obligation consultation.