Is workers' compensation required for my business?

It depends on the state, the number of employees, the type of work, and sometimes the entity structure. Most states require it once a business has employees, but thresholds and exemptions differ, and Texas is elective for most private employers. Confirm with your state's workers' compensation agency, or ask us to verify for each state you operate in.

Are volunteers covered by workers' compensation?

Generally no. Workers' compensation responds to employees, and volunteers usually are not employees. Some states permit an employer to elect coverage for volunteers, and some organizations address the exposure through other means, but it should never be assumed. Any organization relying on volunteers should confirm this specifically.

What is an experience modification factor?

The experience mod is a multiplier comparing your actual past losses to the losses expected for a business of your size and classification. Better-than-expected history produces a mod below the neutral value; worse-than-expected produces one above it. Because it is built from prior years, today's claims affect premium for years to come. It does not apply in the monopolistic fund states.

Why did I receive a bill after my premium audit?

Workers' compensation premium is based on actual payroll, and the deposit collected at the start of the term is only an estimate. At audit the carrier reconciles to real payroll by class code. Payroll growth, misassigned classifications, or uninsured subcontractors being added into your payroll all produce additional premium.

How much does workers' compensation insurance cost?

Insureon, an online insurance agency, reported in April 2026 that its small-business customers pay an average of $54 a month, or $643 a year, for workers' compensation. Most of those customers have fewer than five employees, so treat that figure as a reference point rather than a quote. Workers' compensation is priced on payroll in each job classification against the rate or loss cost for that class in your state, then adjusted by your experience modification once you have one, so more payroll or riskier work costs more.

Workers' Compensation Insurance in Missouri

Workers' compensation pays an injured employee's medical bills and part of their lost wages, and in exchange shields you from most work-injury lawsuits. Whether you must carry it depends on your employee count and industry.

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Part of our guides to commercial insurance and nonprofit insurance.

Covers employee injuries and work-related illnesses — medical care and a portion of lost wages. Requirements vary by state, employer size, and industry.

What It Covers

•Medical treatment for work-related injuries
•Rehabilitation services
•Disability payments (temporary and permanent)
•Death benefits for families
•Return-to-work programs
•Employer liability protection

Example Scenarios

A staff member slips and breaks their leg while working—medical bills and lost wages are covered
An employee develops carpal tunnel from computer work—treatment and rehab are covered
An employee is permanently injured on the job and qualifies for long-term disability benefits

Who Needs It

•Organizations with employees (required in most states, though rules vary)
•Organizations with volunteers (some states require coverage)
•Nonprofits in high-risk fields (healthcare, services, outdoor work)

What this coverage typically responds to

Workers' Compensation: costs this kind of policy typically covers, and losses it typically excludes. Subject to the issued policy.
Cost or loss	Typical treatment
Medical and hospital costs	Typically covered
Rehabilitation services	Typically covered
Lost wages (typically 66% replacement)	Typically covered
Permanent disability benefits	Typically covered
Death and burial benefits	Typically covered
Injuries an employee causes on purpose, or while intoxicated	Typically excluded
Injuries that happen commuting to and from work	Typically excluded
Volunteers, in most states, unless you elect to cover them	Typically excluded
Independent contractors and 1099 workers	Typically excluded
Pain-and-suffering damages beyond the statutory benefits	Typically excluded
Injuries from horseplay or violating clear safety rules	Typically excluded

Commonly misunderstood: Nonprofits frequently assume volunteers are automatically covered. In most states they are not — volunteer coverage usually has to be elected and added deliberately.

Coverage and exclusions, and the exceptions to them, vary by carrier, policy form and endorsement. The issued policy governs.

Why It Matters

Where a state requires it, workers' compensation is not optional. It pays for work-related injuries and, in exchange, is generally the exclusive remedy — which is what protects your organization from being sued directly by an injured employee.

Limits commonly written

Statutory limits (set by state)

How pricing works

Varies by organization — ask for a quote

Availability, eligibility, limits, exclusions, conditions and coverage terms vary by insurer, policy form, endorsement, jurisdiction and individual risk. This is general information, not insurance, legal or tax advice.

Underwriting and cost considerations

Workers' compensation insurance pays for medical care and a portion of lost wages when an employee is injured on the job or develops a work-related illness, under the rules of the applicable state workers' compensation system.

What underwriters evaluate

Payroll broken out by governing classification code for each job function, not a single blended figure
The experience modification factor and the actual loss history sitting behind it
Prior loss runs read for frequency, for open reserves, and for claims that have not yet fully developed
A written safety program and evidence that it is actually implemented through documented training
Return-to-work and light-duty capability, since lost-time duration drives severity more than claim count
Owner, officer and partner inclusion or exclusion elections, which differ from state to state
Use of subcontractors, temporary staffing and 1099 labor, and whether certificates are collected and current
Class-specific hazards such as work at height, confined space, heavy equipment, driving and chemical handling

What affects the premium

Payroll by classification code, applied against each state's rate or loss cost for that class
The classification codes assigned, which is where most disputes and most legitimate savings live
The experience modification factor, built from the employer's own prior losses versus expected losses
State of operation, since rates, benefit levels and system rules differ substantially between states
Any schedule credit or debit and carrier pricing programs, where the state permits them
Claim frequency and lost-time duration, which feed the experience mod for years afterward

Common claim types

Strains and sprains from lifting, pushing, pulling and repetitive motion
Slips, trips and falls, including falls from ladders, scaffolds and elevated surfaces
Struck-by and caught-in incidents involving equipment, tools or materials
Motor vehicle accidents occurring while an employee is driving in the course of employment
Cumulative trauma and occupational illness claims that surface long after the exposure

Common gaps and misunderstandings

Requirements vary by state, employer size and industry; Texas is elective for most private employers
A few states use monopolistic funds, where coverage must be bought from the state rather than a private carrier
Volunteers are generally not covered by workers' compensation, including at nonprofits
Owners, officers and partners are frequently excluded by default and must elect in where the state allows it
Work performed in a state not listed on the policy, or payroll assigned to the wrong class, creates real exposure

Commonly purchased alongside

General Liability
Employment Practices Liability
Hired & Non-Owned Auto Liability
Commercial Property
Umbrella / Excess Liability

Frequently asked questions

Is workers' compensation required for my business?: It depends on the state, the number of employees, the type of work, and sometimes the entity structure. Most states require it once a business has employees, but thresholds and exemptions differ, and Texas is elective for most private employers. Confirm with your state's workers' compensation agency, or ask us to verify for each state you operate in.
Are volunteers covered by workers' compensation?: Generally no. Workers' compensation responds to employees, and volunteers usually are not employees. Some states permit an employer to elect coverage for volunteers, and some organizations address the exposure through other means, but it should never be assumed. Any organization relying on volunteers should confirm this specifically.
What is an experience modification factor?: The experience mod is a multiplier comparing your actual past losses to the losses expected for a business of your size and classification. Better-than-expected history produces a mod below the neutral value; worse-than-expected produces one above it. Because it is built from prior years, today's claims affect premium for years to come. It does not apply in the monopolistic fund states.
Why did I receive a bill after my premium audit?: Workers' compensation premium is based on actual payroll, and the deposit collected at the start of the term is only an estimate. At audit the carrier reconciles to real payroll by class code. Payroll growth, misassigned classifications, or uninsured subcontractors being added into your payroll all produce additional premium.
How much does workers' compensation insurance cost?: Insureon, an online insurance agency, reported in April 2026 that its small-business customers pay an average of $54 a month, or $643 a year, for workers' compensation. Most of those customers have fewer than five employees, so treat that figure as a reference point rather than a quote. Workers' compensation is priced on payroll in each job classification against the rate or loss cost for that class in your state, then adjusted by your experience modification once you have one, so more payroll or riskier work costs more.

Coverage, exclusions and limits vary by carrier and policy form. Review the applicable policy language, and confirm requirements for your state and operations.

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