Your state controls what employers must cover with workers compensation policies, but it doesn't set your premiums. Instead, your insurer uses multiple variables to determine your risk level and how much you should pay. However, if you have good workplace safety programs and a proven record of low injury rates, you can qualify for various state-mandated credits and discounts once you've reached a certain premium level. For example, the base rate for florists reflects the probability of any one florist making a workers comp claim, and is calculated using years of data.
Most businesses receive only a few different classifications to describe their operations.
When you first sign up for workers comp insurance, your premium is primarily determined by what portion of your payroll is allocated to each classification, with different classifications carrying their own risks of injury. It's hard to pin down an average workers comp premium because it varies. Both the frequency of your claims and the dollar amounts paid out by the insurance company are considered, so your final premium reflects a combination of your losses and the insurer's expenses. Each company has an 'expected loss' amount based upon a formula determined by the classification of the business and the amount of payroll. If a company's claims are higher than expected, a debit modification is applied to their premium.