Which states are monopoly workers' comp states?

Four: North Dakota, Ohio, Washington, and Wyoming. In those states the state fund is the only insurer for workers' comp.

How is workers' comp premium calculated?

Per $100 of payroll by class code, modified by an experience modifier if your business is old enough, with carrier credits or debits applied.

Can I opt out of workers' comp?

Only in Texas, with significant trade-offs (the employer loses exclusive-remedy protection and becomes exposed to direct negligence suits). Every other state mandates coverage once thresholds are met.

Workers' Compensation: State Mechanics and Monopoly vs Competitive

Workers compensation insurance pays for employee medical care, lost wages, and disability after a work injury, and almost every state requires it once you have employees. It is the one commercial line where the state, not the carrier, often decides the market: four states write it themselves and bar private carriers, while the rest run competitive markets with private carriers, state funds, or both. This page explains the mechanics for a small employer: what the policy pays, how premium is rated, and what monopoly vs competitive means for where you buy.

The short answer

Workers' comp pays medical care, partial wage replacement, and disability benefits for employees injured or made ill by their work, plus death benefits in fatal cases. In exchange the employer is generally immune from employee negligence lawsuits arising from the injury (the exclusive-remedy bargain). It is state-mandated in 49 of 50 states once you have employees, with the threshold and exemptions varying significantly by state ^{[NAIC: workers' compensation, 2026-05]}. Texas is the one state where private employers may generally opt out of the workers'-comp system, with significant trade-offs ^{[Texas DWC: workers' compensation, 2026-05]}.

What does workers' comp pay?

Five benefit categories sit inside almost every state's workers'-comp statute, with the specific limits and durations set by state law:

Medical, the full reasonable cost of treating the work injury or occupational illness, usually with no deductible to the worker.
Temporary total disability, partial wage replacement (commonly two-thirds of average weekly wage, subject to a state-set maximum) while the worker is fully out.
Temporary partial disability, a smaller benefit when the worker can do reduced-hours or light-duty work.
Permanent disability, a longer-term benefit (and in serious cases a lump sum) when the injury leaves a lasting impairment.
Death benefits, to surviving dependents in fatal cases, plus a burial allowance.

The policy responds without a fault finding: an employee injured doing the work gets the benefits whether the employer was careful or careless. That is the trade for the exclusive remedy: the employee usually cannot sue for negligence, the employer cannot defend by blaming the worker. State-specific exclusions still apply (intoxication, self-inflicted injury, fighting outside the scope of work). For occupational illness, the burden of proving work-relatedness is on the worker.

Monopoly vs competitive state markets

Four monopoly states write workers' comp themselves and bar private carriers from the line entirely: North Dakota, Ohio, Washington, and Wyoming. In those states the employer's only insurer for workers' comp is the state fund (e.g., Washington L&I, Ohio BWC); a private carrier cannot offer a policy ^{[Washington L&I: Do I Need a Workers' Comp Account?, 2026-05]}.

The other 46 states run competitive markets. Within those, several also operate a state-run competitive fund (California, New York, Pennsylvania, Idaho, Maryland, Minnesota, Oklahoma, Oregon, and others) that sits alongside private carriers; an employer can choose either. The remaining states are purely private. State funds in competitive markets often act as the residual market: they accept high-hazard or hard-to-place classes the private carriers decline, with rates set by the same regulator that approves private filings.

Class codes and base rates almost everywhere come from a single rating bureau (NCCI), with a handful of states operating their own bureaus (California, New York, Pennsylvania, New Jersey, Delaware, and others) ^{[NCCI: Classification Basics, 2026-05]}. Carriers file rate deviations and schedule credits off the bureau base, but the class assignment is bureau-controlled.

Typical cost

Workers' comp premium is rated per $100 of payroll by class code. A clerical class might rate at well under $1 per $100; a roofing class often rates above $20 per $100. Multiply by your payroll, modify by your experience modifier (e-mod) if you are old enough to have one, layer in carrier credits or debits, and you have the premium. The single biggest cost driver is class code; the second is payroll; the third is e-mod.

Pay-as-you-go billing options track real payroll, so a business with seasonal hiring is not stuck on a large fixed estimate. The classic structure (deposit plus year-end audit) still works, but the audit can be a large positive or negative bill depending on how the year actually played out.

Workers' comp premium is rated on the NCCI class code applied to each payroll dollar, modified by the state's loss-cost multiplier and the employer's experience modification factor. A national-average dollar figure is almost meaningless without the class code; a payroll-heavy construction operation pays many multiples of a no-employee LLC adding a single owner-included class ^{[NCCI: classification overview, 2026-05]}. Beaconcover does not publish a rate it cannot source; trade-by-trade notes are on the profession pages, and the cost guide covers how the line fits the wider program.

Where to get a quote

In a monopoly state, there is no shopping: the state fund writes the policy, with the rate filed and approved by the state. In a competitive state, quote two or three carriers that write your class code, and if the class is high-hazard quote the state fund too. Workers' comp is one line in a wider program; price it alongside the rest. Workers'-comp specialists often beat generalist carriers on price for a tight set of classes and lose to them everywhere else.

Confirm the class code on the quote matches your actual operations. A misclassified solo handyman quoted as "office clerical" is paying the wrong rate and risks a triple-up at audit when the carrier reclassifies. For the independent-contractor edge case (you have no employees but a client requires workers' comp), see /coverage/workers-compensation-for-independent-contractors/.

Frequently asked questions

The employer carries the policy. An employee injured at work gets medical, wage-replacement, and disability benefits from the carrier; the employer usually has exclusive-remedy protection from negligence suits in exchange.

Not a broker. Beaconcover is an independent comparison site. We are not a licensed insurance broker, agent, or adviser; we route you to providers and do not sell, bind, or advise on policies, and nothing here is legal or tax advice. Workers' compensation rules are state-regulated, vary by entity type and industry, and change; confirm with the state regulator. See /methodology/ and /disclosure/. Last reviewed: 2026-05-27.