Workers compensation insurance pays for medical treatment and lost wages when an employee is injured or becomes ill because of their job. It is required by law in 49 states. The structure is no-fault: benefits flow to the injured worker regardless of who caused the incident, and in exchange the employer gets protection from most employee lawsuits related to workplace injuries.
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A workers comp policy is written in two parts. Part A is the statutory benefit paid to the injured employee: medical care first, then the wages they lose while they cannot work, and everything else in the policy flows from those two. Part B is employer liability, and it answers the lawsuits that fall outside the workers comp system altogether.
Doctor visits, surgery, hospital stays, prescriptions, physical therapy and medical devices related to a work injury or illness. There is no deductible for the employee and no cap on medical benefits in most states. An employee breaks an arm falling from a ladder at a work site.
If an employee cannot work because of a covered injury, the policy replaces roughly two thirds of their average weekly wage during recovery. An employee misses eight weeks recovering from a back injury.
Payments split into temporary total, where the employee cannot work at all, temporary partial, where they can work at reduced capacity, then permanent partial and permanent total. A worker loses partial use of a hand in an equipment accident.
Job retraining, education and job placement services where an employee cannot return to the role they held before the injury.
Funeral costs and ongoing payments to dependents after a fatal workplace accident.
An employee's spouse sues over the effect of the injury on the marriage. The claim is brought by somebody who is not your employee, so it sits outside the statutory benefit and answers under employer liability instead.
An employee alleges conduct beyond what the workers comp system was built to settle. Where a court lets that claim proceed outside exclusive remedy, Part B is what defends it.
A general contractor compensates your employee and then sues you to recover what it paid. The claim arrives from another business rather than from your worker, and Part B is what responds to it.
Standard Part B limits are $100K per accident, $500K policy limit and $100K per employee for disease. Those are the default limits on most policies; higher limits are available and contracts often ask for them. Read them against what your own agreements require, and check them alongside your general liability wording and any umbrella sitting above it, because an umbrella attaches to a stated underlying limit rather than to whatever the policy underneath it happens to carry.
State rules
Workers compensation is mandatory in 48 states plus DC, and most states trigger the requirement with the first W-2 employee. Four situations change that answer. Pick the one closest to your business.
Texas is the only state where private employers can opt out of workers comp. Most Texas employers carry it anyway, because the litigation exposure without it is worse than the premium.
Beyond these four the trigger is usually just the first W-2 employee, and several states add their own thresholds for corporate officers, family members and casual labour. Operating across multiple states compounds all of it. Speak to our team about multi-state workers comp placements.
Workers comp is a no-fault system with a boundary drawn around it. It answers for injury and illness arising out of the job, it pays your employee rather than anybody else, and it does not reach past that. Knowing where the boundary runs is how you know which other policy has to cover the rest.
Four places the line falls:
Covered: An employee breaks an arm falling from a ladder at a work site. Medical treatment and lost wages are exactly what Part A is there for.
Not covered: The same employee is hurt at home on a weekend. That is personal health insurance, because cover follows the job rather than the person.
Covered: An employee's spouse brings a loss of consortium claim after a workplace injury. It comes from outside the comp system, so employer liability under Part B answers it.
Not covered: A customer trips over a cable in your showroom. Anybody who is not your employee is a general liability claim, not a comp claim.
Independent contractors sit right on that boundary and cause more trouble than anything else on it. They are not your employees, so they carry their own cover, but a sub who turns up without a policy can have their claim land on yours and be charged back at the audit. Collect the certificate before the work starts rather than after, and read what a certificate actually proves so that you are checking the right thing on it.
The gaps
The edges of workers comp are where other policies have to do the work, and two of these are gaps rather than exclusions: cover that should exist and does not. Eight that come up on almost every placement.
WHAT YOU NEED
Personal health insurance. Cover follows the job rather than the person, so a weekend injury is not a comp claim however serious it is.
WHAT YOU NEED
Nothing. Intoxication is a defence to the benefit in most states, and the claim can be denied outright rather than reduced.
WHAT YOU NEED
Nothing. Deliberate self-harm falls outside the statutory benefit, and no endorsement brings it back inside.
WHAT YOU NEED
Their own policy. Collect the certificate before the work starts, because an uninsured sub's claim can be charged back to you.
WHAT YOU NEED
General liability. A customer, a visitor or a passer-by is never a workers comp claim, whatever happened to them on your site.
WHAT YOU NEED
Professional liability, or errors and omissions. Comp answers for bodily injury to your staff and never for the advice you sold.
WHAT YOU NEED
A stop-gap employer liability policy. The state fund writes Part A only, so Part B is missing from the certificate without saying so.
WHAT YOU NEED
Nothing, and the audit finds it anyway. Workers comp is reconciled against actual payroll at expiry and the adjustment runs both ways.
The two that catch businesses out are the stop-gap gap in the monopolistic states and the uninsured subcontractor, because neither one shows up until a claim does. Speak to our team about which of these your current schedule already answers, and about the general liability policy underneath it where members of the public are on your site.
The formula
Workers comp premium is worked out with a standard formula: annual payroll divided by 100, multiplied by a class code rate, multiplied by your experience modification rate. Two of those three are set for you. The third is your own claims record, which makes this the one commercial policy where what happens between renewals lands directly in the arithmetic.
Premium scales directly with payroll, so more employees or higher wages means a higher base. It is also the number the carrier checks: workers comp is audited annually, actual payroll is reviewed at expiry, and the premium is adjusted against whatever the policy was written on.
NCCI or state-assigned class codes group businesses by risk, and the rate attached to each code reflects the historical loss experience for that type of work. Roofers are rated at 30 to 50 times the rate applied to clerical work on the same payroll dollar. The same code can be rated two to three times differently from one state to the next, because each state sets its own rate structure.
The experience modification rate compares your claims history with that of your peers. 1.0 is average. Above 1.0 applies a factor above 1.0 to the manual premium and below 1.0 applies one below it, so a 1.2 multiplies by 1.2 and a 0.8 multiplies by 0.8. It is the only input in the formula a business moves itself, and it moves slowly.
None of that is hidden and none of it is negotiable. What is open to argument is the class code your payroll is filed under, and a misfiled code means you are either overpaying or underinsured with no way to tell which. We read the codes against what your people actually do before the file goes out, and check the certificate wording your contracts will ask for at the same time, including the waiver of subrogation a job may require.
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Every line below is something a state rule or an underwriter turns into a different placement. Nothing here is priced and nothing here is a quote. It shows which parts of a workers comp file your business has to get right before it goes anywhere.
What your file has to deal with
Tick what applies and the placement it implies appears here.
Take this to your renewal. A broker can say in one call which of these your current policy already handles, and which of them your last audit found the hard way.
Speak to our teamCost
Rosella places cover and does not set the rate, so this section names the inputs rather than a number. Six of them decide what the market will offer on a workers comp file, and they are the six an underwriter reads before anything else.
Which codes your payroll is filed under, and whether they match what your employees actually do all day. It is the input most often wrong on a file we are asked to look at.
The base the whole calculation sits on, and the figure the annual audit checks. An estimate that drifts away from reality does not save anything, it only defers.
Your experience modification rate, and behind it the individual claims that built it. A closed claim with the finding remediated reads very differently from an open one.
Each state sets its own rate structure, its own benefit schedule and its own rules on who must be covered. Four of them allow no private carrier at all.
A business with forty field workers and five office staff is a different file from a forty-five person office at identical payroll. The mix is what gets split across codes.
Documented procedures, return-to-work arrangements and drug testing. The only input on this list a business changes deliberately, and the slowest one to show up.
Three marks is an input the market weighs more heavily than the others listed here. It is a relative reading of how workers comp files get underwritten, not a rate, and Rosella does not set the rate.
Workers comp is audited annually. The carrier reviews actual payroll at policy expiry and adjusts against the estimate the policy was written on, in whichever direction the numbers go. If you hired more than expected, or roles were reclassified part way through the year, the adjustment can be significant and it arrives after the money has already been spent. We review class code assignments before submission so the audit is a reconciliation rather than a surprise, and we say which codes we changed and why.
Talk to an expertProcess
We understand your business first, then take it to the carriers who want to write it. An advisor walks you through the options and what they cost. No two files are the same, so what follows is the shape of a placement rather than a script.
What you do, where, with how many people, and what your contracts oblige you to carry. Those answers decide which markets will look at the file at all, and how much of the rest of this applies to you.
One set of information goes to underwriters with genuine appetite for your work rather than whoever happened to quote last renewal. An advisor talks you through what comes back and what it costs.
A main contractor wants proof before your crew can start, and this is how COIs get issued here. We read the certificate request against your contract so it asks the carrier for the wording that contract needs rather than a generic form that usually fails review.
It is mandatory in 48 states plus DC, and most states trigger the requirement with the first W-2 employee. Texas is the only state where a private employer can choose not to subscribe, and opting out there means giving up exclusive remedy protection rather than saving yourself an obligation.
Part A is the statutory workers comp benefit paid to the injured employee. Part B is employer liability, and it answers lawsuits that fall outside the comp system: a spouse's loss of consortium claim, an allegation of gross negligence, or a third party suing you after it compensated your worker. Standard Part B limits are $100K per accident, $500K policy limit and $100K per employee for disease.
The experience modification rate compares your claims history with that of businesses like yours. 1.0 is average. It is applied as a factor in the premium formula alongside payroll and the class code rate, so an EMR above 1.0 multiplies the manual premium upward and one below 1.0 multiplies it down.
They carry their own. The trouble is what happens when they do not: in construction especially, an uninsured sub's claim can be picked up by the general contractor's policy and charged back at audit. Collect a certificate before anyone starts work rather than after the claim.
The carrier reviews actual payroll at policy expiry against the estimate the policy was written on and adjusts in whichever direction the numbers go. Unexpected hiring and reclassified roles are the two things that make an audit adjustment large.
Ohio is one of four monopolistic states, with North Dakota, Washington and Wyoming, where Part A has to be bought through the state fund. The state fund does not include Part B, so employer liability is bought separately as a stop-gap policy. Without it there is nothing to defend a claim that falls outside the comp system.
Not by asking us, because Rosella places cover and does not set the rate. What moves is the file: class codes that match the work, a claims record that improves the modification rate over time, documented safety and return-to-work programs, and a submission that reaches carriers with appetite rather than only the one that quoted last year.
Often not. Assigned risk is where a file lands when the voluntary market has not been properly shopped, and that happens more often than it should. If the class codes were wrong, or the submission only ever went to one or two carriers, the voluntary market is worth testing again before renewal.
Get started
Whether you are quoting workers compensation for the first time or replacing a carrier that is not performing, we can move. We check the class codes before the file goes out, then submit across admitted carriers and, where the state requires it, the state fund or the assigned risk pool.
