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Workers’ compensation is important, not only to the employees who are being covered, but it’s important to the business as well. It can save you from costly litigation in the future, and it can demonstrate to your employees that you care about their wellbeing on the job.

Not to mention, it’s required for many businesses according to state law.

That doesn’t mean you want to pay more than you have to for this kind of coverage.

So, what is the average cost of workers’ compensation? And, how can you keep costs down?

The Average Cost of Workers’ Comp Per Employee

The nationwide average cost of workers’ compensation insurance is approximately $78 per month, per employee. That amounts to a little less than $1,000 per year.

However, that’s not necessarily what you will pay. There are multiple factors that can impact how much you’ll pay to cover every employee on your roster with workers’ compensation.

When asking, “What is the average cost of workers’ compensation?” you have to consider things like:

  • The industry you work in
  • The type of work each employee does
  • How much money each employee makes
  • Your business’s claims history
  • Total payroll

There’s a simple formula you can complete to find the workers’ compensation cost per employee if you already have a workers’ comp policy.

First, divide each employee’s payroll by 100. Then, multiply that number by your workers’ compensation insurance rate.

Working out how much you pay for workers’ comp for each employee can help you determine if your employees are covered properly. If the amount seems high, there are things you can do to reduce costs.

Ways to Save on a Workers’ Compensation Policy

First, it is important to know the workers’ compensation laws where you live. Some states don’t require coverage for certain types of businesses, and businesses with very few employees. If you live in one of these states, you may not have to pay a workers’ compensation premium at all.

Make sure each and every one of your employees is classified correctly. For example, you can get lower rates for clerical employees than maintenance employees. Make sure office staff aren’t grouped in with employees who do manual labor when creating your policy.

The fewer claims your business makes, the better rates you can secure. Review claims and losses every year. Dig into the kinds of accidents that are reported by your company and see if there’s a way to address issues before they turn into a claim. For example, overexertion, like pulled muscles, is a common workers’ comp claim that can be reduced or eliminated with regular stretching before and after the workday.

Finally, one of the best ways to save on a policy is to work with an insurance broker. They can crunch the numbers and provide you with multiple coverage options that meet the minimum requirements according to the state laws where you are operating. Because a broker works on your behalf and not for the insurance companies, you can trust that they will provide you with an honest policy that covers you where you need it—and not where you don’t.

Still wondering what is the average cost of workers’ compensation in regards to your business? Or maybe you worked out the cost of each employee, but you’re wondering if it’s too high, too low, or just right?

A member of the DJM Insurance team would be happy to help you. First, learn more about our workers’ compensation options. Then, contact us with your questions. We’ll make sure you have the right policy for your business.

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