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10 cheapest states for workers compensation by industry (2025)

Ranked list of the cheapest states for workers compensation across construction, manufacturing, transportation, and services. Median rates per $100 of payroll, sourced from state DOI filings.

Published January 14, 2025 · 9 min read

10 cheapest states for workers compensation by industry

The cheapest state for workers compensation depends on your industry. There is no single national ranking that applies equally to construction, manufacturing, transportation, and services. The rankings below are drawn from our 13,833-cell dataset across 25 NCCI-filing states, with median rates per $100 of payroll for the most common class codes in each industry [cells/cells-summary.json, industries/industries-summary.json].

These are bureau loss costs (or independent-bureau rates) before carrier loss-cost multipliers and modifiers. Final policy premium varies based on LCM, EMR, and schedule credit.

1. Indiana

Construction median: approximately $4.20 to $5.80 per $100. Manufacturing median: approximately $1.10 to $1.80. Services median: approximately $0.80 to $1.20.

Indiana consistently publishes among the lowest NCCI loss costs in the country. The state has moderate benefit caps, a 2-year statute of limitations, and a restrictive 1099-versus-employee analysis through the IDOI. The Indiana Compensation Rating Bureau (ICRB) operates as the state’s bureau, working with NCCI on loss-cost filings.

Indiana is particularly competitive for manufacturing operations and light construction. Heavy construction (logging, roofing) is less of an outlier; the savings concentrate in mid-rate classifications.

2. Wisconsin

Construction median: approximately $4.40 to $6.40 per $100. Manufacturing median: approximately $1.20 to $1.90. Services median: approximately $0.85 to $1.30.

Wisconsin’s Workers Compensation Rating Bureau (WCRB) files loss costs separately from NCCI. The state has a 2-year statute of limitations, lifetime medical for catastrophic injuries, and a moderate benefit-cap structure. The WCRB’s transparency in publishing rate filings makes Wisconsin one of the easier states to research.

3. Tennessee

Construction median: approximately $4.60 to $6.60. Manufacturing median: approximately $1.30 to $2.00. Services median: approximately $0.85 to $1.30.

Tennessee uses NCCI loss costs with state-specific approvals. The Bureau of Workers’ Compensation operates within the Tennessee Department of Commerce and Insurance. Tennessee has a 1-year statute of limitations and a 6-year limit for occupational disease claims, which contains long-tail loss exposure.

The state’s right-to-work environment and conservative claim-adjudication tradition keep loss costs lower than national averages for most classifications.

4. Arkansas

Construction median: approximately $4.80 to $7.00. Manufacturing median: approximately $1.40 to $2.10. Services median: approximately $0.90 to $1.40.

Arkansas uses NCCI with state-specific approvals through the Arkansas Workers’ Compensation Commission. The state’s benefit caps are moderate; the wage-replacement rate is the standard 66.67%. Arkansas has shown rate decreases for several consecutive policy years through the late 2010s and early 2020s, reflecting favorable loss-trend experience.

5. North Carolina

Construction median: approximately $4.80 to $6.80. Manufacturing median: approximately $1.20 to $1.90. Services median: approximately $0.85 to $1.30.

North Carolina is an independent-bureau state. The NCRB (North Carolina Rate Bureau) files loss costs separately. The state has competitive rates across most industries, particularly for service operations and light manufacturing. The construction rates are moderate; heavy construction in NC runs near the cross-state median.

6. Virginia

Construction median: approximately $5.00 to $7.20. Manufacturing median: approximately $1.30 to $2.00. Services median: approximately $0.90 to $1.40.

Virginia uses NCCI with approvals through the Virginia Bureau of Insurance. The state has a 2-year statute of limitations and competitive rates particularly for manufacturing and services. Virginia’s benefit-cap structure is moderate; the maximum weekly benefit adjusts annually with the state average wage.

7. Texas (subscribers only)

Construction median: approximately $5.40 to $8.40 per $100 [state-facts/TX.json shows TX uses NCCI]. Manufacturing median: approximately $1.50 to $2.30. Services median: approximately $1.00 to $1.60.

Texas is a complicated case. The state has the only optional-coverage workers compensation system in the country [state-facts/TX.json]. Texas employers can elect to be “non-subscribers” and decline coverage entirely, accepting common-law tort liability instead.

For employers who do subscribe, Texas’s NCCI-filed rates are competitive for most industries. The Texas Department of Insurance Workers Compensation publishes a non-subscriber registry and detailed market-conduct data. Texas Mutual Insurance Company is the state-fund-equivalent (a nonprofit insurance company created by the state) and is the largest single carrier in the Texas market.

The non-subscriber option does not remove cost; non-subscribers face direct tort liability for workplace injuries, which carries its own premium-equivalent cost through commercial general liability coverage and self-insurance reserves.

8. Mississippi

Construction median: approximately $5.00 to $7.40. Manufacturing median: approximately $1.30 to $2.10. Services median: approximately $0.95 to $1.50.

Mississippi uses NCCI with approvals through the Mississippi Workers’ Compensation Commission. The state has moderate benefit caps and a restrictive claim-adjudication tradition. Loss costs in Mississippi have been stable to declining for most classifications in recent filing cycles.

9. Utah

Construction median: approximately $5.20 to $7.40. Manufacturing median: approximately $1.40 to $2.20. Services median: approximately $1.00 to $1.50.

Utah uses NCCI with approvals through the Utah Insurance Department. The Utah Labor Commission’s Workers Compensation Division administers benefits. The state has competitive rates across most industries and a relatively quick claim-resolution timeline compared to other Mountain West states.

10. South Carolina

Construction median: approximately $5.20 to $7.60. Manufacturing median: approximately $1.50 to $2.30. Services median: approximately $1.00 to $1.60.

South Carolina uses NCCI with approvals through the South Carolina Department of Insurance. The state has a 2-year statute of limitations and moderate benefit caps. SC’s construction rates are below the national median but moderate compared to the Indiana/Wisconsin/Tennessee leaders.

What does not appear on this list

Two notable exclusions:

California publishes some of the highest workers compensation rates in the country. The state’s high benefit caps ($1,659.23 max weekly TTD as of 2024 [state-facts/CA.json]), broad eligibility, aggressive medical-cost trends, and AB 5’s restrictive 1099 classification all push loss costs higher. California construction rates run materially above the national median.

The four monopolistic states (Ohio, North Dakota, Washington, Wyoming) are not directly comparable to private-market states because the state agency is the only legal provider [state-facts/OH.json, state-facts/ND.json, state-facts/WA.json, state-facts/WY.json]. Ohio BWC and Wyoming DWS publish competitive rates relative to private-market states, but the absence of competition makes direct comparison imperfect.

How to use this ranking

The headline rate is one input to your premium. Three other factors materially affect what you pay:

1. Carrier loss-cost multiplier. Carriers in NCCI states multiply the bureau loss cost by an LCM to produce the manual rate. LCMs typically range from 1.10 to 2.00. A state with a $5 loss cost and a 1.30 LCM produces a $6.50 manual rate. A state with a $6 loss cost and a 1.10 LCM produces a $6.60 manual rate. The bureau-level state ranking does not capture LCM variation.

2. Carrier appetite. Some carriers actively write specific classes in specific states. A construction account in Tennessee may get sharp pricing because three carriers want it. The same account in a state with limited carrier appetite gets harder pricing despite a lower bureau rate.

3. EMR and schedule credit. Both modifiers compound on top of the manual rate. A claim-free three-year history (EMR 0.85) plus 15% schedule credit can reduce premium by 25% or more, and these levers operate independently of the state ranking.

The practical implication: do not move your business based on state rankings alone. Get quotes from multiple carriers in the states where you operate, and compare the all-in cost.

Industry-specific rankings

Cheapest for construction: Indiana, Wisconsin, North Carolina Cheapest for manufacturing: Indiana, Wisconsin, Tennessee, North Carolina Cheapest for transportation/trucking: Indiana, Wisconsin, Arkansas Cheapest for office and services: Indiana, Wisconsin, Tennessee, Texas

The Indiana/Wisconsin/Tennessee triangle is the most consistently low-cost region across the four major industry groups. North Carolina (independent bureau) is competitive specifically for construction. Texas is competitive for services and for employers willing to subscribe to the standard system.

This is general information, not legal or insurance advice. Workers compensation rates vary substantially within and across states. Verify against the most current state DOI filing for your specific class code and state. Consult a licensed broker for your specific situation.

Frequently asked questions

What's the cheapest state for workers compensation?

Indiana, Wisconsin, and Tennessee consistently publish the lowest workers compensation rates across most industries in our 25-state dataset. Across construction, manufacturing, and services classifications, these three states publish median rates 15% to 30% below the cross-state average.

Why are workers comp rates lower in some states?

Three structural reasons. First, lower benefit caps reduce claim costs. Second, more restrictive eligibility rules (shorter statute of limitations, more rigorous causation requirements) reduce claim frequency. Third, lower medical-cost trends in the state translate directly to lower loss costs.

Does the cheapest state mean the best deal for my business?

Not always. The headline rate per $100 of payroll is one input. Carrier loss-cost multipliers, schedule credit, EMR, and the carrier's specific underwriting appetite for your class also matter. A higher headline rate with a sharp LCM and aggressive schedule credit can produce a lower final premium than a low headline rate with poor underwriting terms.

Which state is most expensive for construction workers comp?

California publishes some of the highest construction rates in the country, driven by high benefit caps, broad eligibility, and aggressive medical-cost trends. The CA-specific carpentry classifications run materially above the cross-state median. The state's strict misclassification penalties (up to $100,000 plus criminal charges) also push compliance costs higher.

How do I check rates for my specific business?

Look up your class code at /class-code/, then navigate to your state page at /state/[code]/. The state page shows the rate range for the most common class codes in that state, drawn from the most recent bureau filing.

Can I move my business to a cheaper state to lower workers comp?

Workers comp coverage applies in the state where the work is performed, not where the business is incorporated. Moving the headquarters does not change the rates for work performed in the original state. Moving the actual operations does, but other costs (real estate, labor, supply chain) usually dominate the workers comp savings.