What is workers' compensation insurance?

Workers' compensation is a state-mandated insurance policy that pays medical expenses, lost wages, and rehabilitation costs when an employee is injured or made ill by their job, regardless of fault. In exchange, employees generally give up the right to sue their employer over the injury. Most states require it as soon as you have one employee.

Can I buy my own workers' comp insurance as a business owner?

Yes. Most businesses buy it from a private carrier, and some states (like Ohio, North Dakota, Washington, and Wyoming) require you to buy from a state fund instead. Sole proprietors with no employees usually aren't required to carry it, but some choose coverage for themselves — and many client contracts require it even when the state doesn't.

What does workers' comp not cover?

It doesn't cover injuries that happen outside the scope of work: commuting to and from the job, self-inflicted injuries, injuries from intoxication or fighting, or claims by independent contractors (who aren't employees). It also doesn't cover third-party injuries — that's general liability.

What is an experience modifier on a workers' comp policy?

The experience modifier (or 'X-Mod'/'EMR') compares your claims history to similar businesses. A modifier of 1.00 is average; below 1.00 earns a premium discount, above 1.00 a surcharge. It's printed on the declarations page and recalculated annually, so it's worth checking at each renewal.

How much does workers' comp insurance cost?

Premium is calculated per $100 of payroll, at a rate set by your classification codes, then adjusted by your experience modifier. Low-risk clerical work can run well under $1 per $100 of payroll while high-risk trades can run many times that, so cost varies enormously by industry and state.

How long should I keep workers' comp records?

Keep every policy permanently — occupational disease claims can surface decades later and the policy in force at the time of exposure is the one that responds. Keep the payroll records behind each premium audit at least four years, and OSHA Form 300 injury logs for five years following the year they cover.

Insurance

Workers' Compensation Insurance Policy

Workers' compensation insurance is the state-mandated business policy that pays medical costs and lost wages when an employee is injured or made ill by their job. The policy document lists the carrier, policy number, covered states, classification codes with payroll rates, an experience modifier, and employers liability limits.

Written & maintained by the Granite team · Last updated August 2026

Overview

Nearly every state requires workers' comp once you hire your first employee, and in some states even one part-time hire triggers the mandate. The policy has two parts: Part One pays the injured employee's statutory benefits with no dollar cap, and Part Two (employers liability) covers lawsuits related to the injury up to stated limits.

The declarations page is where the business-specific numbers live: the class codes that describe your work, the rate charged per $100 of payroll for each, your experience modifier, and the estimated annual payroll the premium was based on. Insurers audit that payroll after the term ends, which is why the paperwork around this policy piles up.

When you’ll get your Workers' Compensation Insurance Policy

You hired your first employee and your state requires coverage
You renewed or switched workers' comp carriers
A client or general contractor requires proof of workers' comp before you can start work
Your carrier completed a premium audit and issued revised paperwork
Your experience modifier changed, changing your premium

What’s on your Workers' Compensation Insurance Policy

These are the fields Granite reads and extracts automatically the moment you upload one.

Named Insured: The employer the policy covers.
Carrier & Policy Number: The insurer and the unique policy identifier.
States Covered: The state(s) listed in Item 3.A where coverage applies.
Employers Liability Limits: Bodily injury by accident (each accident) and by disease (each employee / policy limit).
Class Codes & Rates: The classification codes describing your work, each with a rate per $100 of payroll.
Experience Modifier: The multiplier (e.g. 0.92) that adjusts your premium based on your claims history.
Estimated Annual Payroll: The payroll figure the premium was calculated from, trued up at audit.

How long to keep it

Keep every annual policy permanently. Keep the payroll records behind each premium audit at least 4 years, and OSHA injury logs 5 years.

Occupational disease claims can surface decades after exposure, and the policy that responds is the one in force at the time of exposure — so an expired workers' comp policy is never safe to toss. Federal OSHA separately requires covered employers to keep Form 300 injury and illness logs for five years, and premium audits can be disputed only if you still have the payroll records.

How Granite handles your Workers' Compensation Insurance Policy

Granite reads your workers' comp declarations (carrier, policy number, covered states, employers liability limits, class codes, experience modifier, and audited payroll) and files each annual policy with your business insurance. Every renewal stays searchable, so when an old claim or audit dispute references a prior period you can pull the exact policy in force then, and Granite reminds you before the term lapses.

FAQ

Workers' Compensation Insurance Policy: common questions

What is workers' compensation insurance?: Workers' compensation is a state-mandated insurance policy that pays medical expenses, lost wages, and rehabilitation costs when an employee is injured or made ill by their job, regardless of fault. In exchange, employees generally give up the right to sue their employer over the injury. Most states require it as soon as you have one employee.
Can I buy my own workers' comp insurance as a business owner?: Yes. Most businesses buy it from a private carrier, and some states (like Ohio, North Dakota, Washington, and Wyoming) require you to buy from a state fund instead. Sole proprietors with no employees usually aren't required to carry it, but some choose coverage for themselves — and many client contracts require it even when the state doesn't.
What does workers' comp not cover?: It doesn't cover injuries that happen outside the scope of work: commuting to and from the job, self-inflicted injuries, injuries from intoxication or fighting, or claims by independent contractors (who aren't employees). It also doesn't cover third-party injuries — that's general liability.
What is an experience modifier on a workers' comp policy?: The experience modifier (or 'X-Mod'/'EMR') compares your claims history to similar businesses. A modifier of 1.00 is average; below 1.00 earns a premium discount, above 1.00 a surcharge. It's printed on the declarations page and recalculated annually, so it's worth checking at each renewal.
How much does workers' comp insurance cost?: Premium is calculated per $100 of payroll, at a rate set by your classification codes, then adjusted by your experience modifier. Low-risk clerical work can run well under $1 per $100 of payroll while high-risk trades can run many times that, so cost varies enormously by industry and state.
How long should I keep workers' comp records?: Keep every policy permanently — occupational disease claims can surface decades later and the policy in force at the time of exposure is the one that responds. Keep the payroll records behind each premium audit at least four years, and OSHA Form 300 injury logs for five years following the year they cover.

Sources

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