Who pays for workers’ compensation insurance?

While employers are responsible for purchasing and maintaining workers’ compensation insurance, states plays a key role in setting the rules. Each state determines the types of employers that must carry coverage, how employee benefits are structured, and whether insurance is purchased through the private market or a state-run fund.

In most states, employers buy coverage directly from an insurance provider like Sentry. However, in a handful of monopolistic states, employers are required to purchase coverage through a state-managed insurance program.

Although nearly every employer pays for workers’ compensation insurance, how they pay—and how much they pay— can look very different from one business to another.

Factors such as company size, industry, safety record, and claim history all influence premium costs.

• Smaller businesses typically pay fixed premiums based on their payroll and industry classification.

• Larger businesses may qualify for more flexible arrangements like:

  • Retrospective rating insurance plans, where premiums adjust based on actual losses.

  • Self-insured WC plans, where the company pays claims directly but must adhere to strict financial requirements.

Regardless of how it’s structured, an employer’s workers’ compensation policy is an essential cost of doing business, and an investment in both their employees and their bottom line.

Managing workers’ compensation responsibilities can be complex. At Sentry, we work closely with employers to build customized workers’ compensation plans that fit their business structure, financial goals, and risk tolerance.

Explore our workers’ compensation insurance solutions to see how we can help you protect what matters most.