Workers' Compensation Insurance Calculator: Estimate Your Costs

When you own a business, it comes with numerous different costs, including workers' compensation insurance. If your company has employees, it's critical, and probably even mandatory, to be covered with adequate workers' comp insurance. Workers' comp can pay for the costs of treating employee injuries and illnesses caused by their job or work environment. It also protects the employer from employee lawsuits for these incidents. 

In most states, but depending on your niche, businesses with two or more employees are most often required by law to have this coverage. There are nuances regarding the factors that go into a workers' compensation cost calculator. These include the state you're in, the size of your business's payroll, and the jobs that your employees perform. 

An independent insurance agent can help set you up with a workers' comp quote for coverage for a business in your niche. But to begin with, check out our workers' compensation calculator. 

Workers' Comp Insurance Cost Calculator 

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How will this quote help me?

Your quote is based on several common factors to give you a clear picture of the cost you can expect, though an independent agent can shop around and maybe even improve your rate! Use our free workers' comp calculator to get started.

NOTE: This workers' comp calculator quote is not final, though we did work with professional actuaries to help get you a ballpark figure to get started.

How Is Workers' Compensation Insurance Calculated?

To calculate your business's workers' comp insurance premium, the typical formula is to divide your business's annual payroll for all employees by 100, then multiply that total by your workers' comp rate. 

Broken down, the workers' comp calculator formula works like this:

1. Divide your annual employee payroll by 100
2. Multiply that total by your workers' comp rate
3. End with this formula: (Your business's annual employee payroll / 100) x (your workers' comp insurance rate) = Your estimated workers' comp premium

The factors that determine your business's workers' comp rate are its class code and experience rate modification factor. So, stated another way, your formula really looks like this:

• (Your business's annual employee payroll / 100) x (Your business's class code rate) x (Your business's experience rate modification factor) = Your workers' comp insurance premium

Real business example:

• If your business had an employee that earned $25,000 last year over 250 total days on the clock, that would equal $100 per day of income. But if this employee would have normally worked a full 260 days per year without sick leave, vacation, etc. (i.e., 5 days per week over 52 weeks), then you'd multiply their income per day ($100) by 260 to calculate their full-time benefits, which would come to $26,000. 
• The amount of benefits this specific employee would be entitled to would be based on $26,000 annually, which breaks down to $500 per week. 
• If this specific employee became disabled as a result of job duties or workplace environment, through workers' comp they could receive 60% of their typical wage, which would equate to $300 weekly.

If you're still confused about how workers' compensation is calculated, an independent insurance agent can further break it down for you.

Calculating How Much Workers' Compensation Insurance You Need

Determining how much workers' comp coverage you need is fairly simple, especially if you work with an independent insurance agent. Workers' comp is a coverage included in business insurance to protect employees from injury, illness, or death on the job or due to job-related activities. So, the amount of coverage you need will depend on how many employees your business has, along with other factors like:

• State law requirements: Depending on where you live, your business will have different requirements for workers' comp. Some states require that all businesses with two or more employees carry coverage, while others have a higher minimum employee limit. Further, some states allow various industries, like businesses in the agricultural field, to not purchase workers' comp without penalties. 
• Workers' comp class codes: The National Council on Compensation Insurance determines your business's class code, which is a four-digit number. These codes correspond to different rates for workers' compensation insurance based on a job's risk level, etc. Class codes set the amount to be paid in workers' comp premiums per $100 of employee wages.
• Number of employees: The number of employees your business has will obviously impact your workers' comp rates. The more employees you have, and the more annual wages you pay out, the more coverage you'll need. Your premiums will go up the more payroll you need to be able to cover in case of disaster.
• Employee classifications: The type of work your employees perform determines their classification in terms of workers' comp. These classifications influence your workers' comp premiums. Employees with riskier job classifications will cost more to cover with workers' comp because of the increased risk of injury or illness they face on the job.
• Payroll: The higher your employees' wages or salaries, the more income you'll need to be able to cover in case of a disaster with your workers' comp. Higher wages and payroll result in a need for more workers' comp coverage. In turn, your premiums will be higher.
• Claims history: The more workers' comp claims your business files, the more your premiums are likely to increase. Your claims history shows your insurance company how likely future incidents are, and how safe your job environment really is. The fewer claims you've filed, the lower your premiums can be.

Your independent insurance agent can help you calculate exactly how much workers' compensation insurance your specific business needs to fully cover its team.

Factors That May Affect Your Workers' Compensation Insurance Estimate

Your workers' compensation insurance estimate is affected by several different factors, including your business's loss history and more. So how is workers' comp insurance calculated? You'll determine this by considering the following factors and how they apply to your specific business. 

These factors affect workers' comp insurance estimates:

• Loss history: Your business's history of workers' comp claims influences your current premium rates. The more claims your business has filed, the more expensive your rates will be. A higher rate of claims history can show insurance companies that your job environment can be considered a higher risk.
• Premium discount factor: Businesses with higher workers' comp premiums, typically above $10,000 annually, might get a premium discount factor. That means the insurance company can apply credits or debits to your policy's premiums to bring down your annual costs for coverage. An independent insurance agent can help you determine if your business will earn a premium discount factor for workers' comp.
• Experience modifier: A number used by insurance companies to gauge the past cost of injuries and future chances of risk by an employer. The lower your business's experience modification rate is, the lower your workers' comp premiums will be. The opposite is also true, the higher your business's experience modifier, the higher your premiums will be.
• Credits for safety programs & safety measures: Workers' comp insurance companies can also award you credits or discounts for providing a safe work environment for your staff. Hosting safety programs and training and otherwise enforcing safe practices in the workplace can earn your business coverage discounts. The lower your job site's risk of injury or illness, the less you'll pay for workers' comp.

If you want more information about earning discounts on your workers' comp premiums, work together with an independent insurance agent.

FAQ about Calculating Workers' Compensation Insurance

Why Choose An Independent Insurance Agent?

It’s simple. Independent insurance agents simplify the process by shopping and comparing insurance quotes for you. Not only that, but they’ll also cut the jargon and clarify the fine print so you know exactly what you’re getting.

Independent insurance agents also have access to multiple insurance companies, ultimately finding you the best workers' compensation insurance, accessibility, and competitive pricing while working for you.