Workers Compensation

 Is a business insurance policy that provides benefits to employees who get injured or become ill because of their job. It also helps protect employers from many workplace injury lawsuits.

In most U.S. states, businesses are legally required to carry workers’ comp once they hire employees. Texas is a notable exception for many private employers.  

What workers’ compensation insurance covers

Workers’ comp typically covers:

1. Medical expenses

Pays for:

  • Doctor visits
  • Hospital care
  • Surgery
  • Medication
  • Physical therapy
  • Rehabilitation

2. Lost wages

Provides partial wage replacement while an employee cannot work because of a work-related injury or illness.

3. Disability benefits

If the worker suffers temporary or permanent disability, the policy may provide ongoing payments.

4. Job retraining

If an injured employee cannot return to the same type of work, workers’ comp may pay for retraining or vocational rehabilitation.

5. Death benefits

If an employee dies from a workplace accident or illness, workers’ comp may pay:

  • Funeral expenses
  • Survivor benefits to dependents

6. Employer liability protection

Many policies also include employer liability coverage, which can help cover legal defense costs if an employee sues over a workplace injury.  

What workers’ comp usually does NOT cover

Most policies do not cover:

  • Injuries outside work
  • Employee intoxication or drug-related incidents
  • Intentional self-harm
  • Independent contractors (in many cases)
  • Violations of company policy or criminal acts

Coverage rules vary by state.

How much workers’ compensation insurance costs in mid-2026

Workers’ comp pricing depends heavily on:

  • Industry risk
  • Payroll size
  • State laws
  • Number of employees
  • Claims history
  • Type of work performed

Insurers usually calculate premiums as a rate per $100 of payroll.  

Examples by industry in 2026

Industry Typical Annual Premium
Real estate office ~$255
Restaurant ~$1,600
Gym/fitness center ~$2,500
Landscaping ~$4,000
Plumbing ~$4,800
Roofing contractor $12,000+

Why workers’ comp costs vary so much

High-risk jobs cost more because injuries are more likely.

Examples:

  • Office accountant → low premium
  • Roofer → very high premium

Insurers also look at:

  • Past claims
  • Safety programs
  • Payroll size
  • State regulations
  • Employee job classifications

Disclaimer: All information provided is for informational purposes only and should not be construed as legal, financial, tax, or professional advice. Current costs, benefits, rates, and program details are based on information available at the time of publication and are subject to change without notice. Actual eligibility, pricing, incentives, and terms may vary and should be independently verified with the appropriate providers, agencies, or professionals before making any decisions or commitments.