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Arizona business insurance: requirements and costs

In Arizona, NCCI files workers' comp rates once a year for January 1, and the Department of Insurance and Financial Institutions (DIFI) reviewed a 6.7% reduction for 2026, the 12th consecutive annual decrease.⁠1⁠2 There is no headcount threshold: an employer with any regularly employed worker must carry comp, and an uninsured employer loses the usual defenses in an injury suit.⁠3⁠6 Arizona employers' comp costs per $100 of wages were about 37% below the national figure in 2023, by our calculation from NASI data.⁠10

Checked against 13 sources Last reviewed How we check figures

Arizona at a glance

Workers’ comp required1+ regularly employed worker; no minimum headcount
Where employers buy itPrivate insurers
Rates set byNational Council on Compensation Insurance
Employer comp cost, 2023$0.62 per $100 of covered wages (US $0.98)
Comp rate index, 2024$0.70, ranked 46 of 51 (1 = most expensive)
Employer health premium, 2025$7,734 single, $23,143 family (average total premium)
Auto liability minimum25/50/15

Arizona runs a rating-organization system with one annual rate event. State law has workers' comp insurers meet their filing duty by joining a licensed rating organization, which must file rates each year effective January 1. Each filing waits at least 30 days before it takes effect unless the director shortens that, and an insurer may not write a policy except under the filings in effect for it.⁠2 NCCI is that organization. DIFI's announcement for 2026 describes a review of NCCI's filing for a 6.7% reduction, and says NCCI bases its recommended rates on claims volume, claims utilization, workforce and wages, as well as rule or legislative changes. DIFI reported about 120,000 comp policies written by 335 insurers for $865,560,247 in premium (its figures, period not stated).⁠1 The law also lets one employer pay more than the filed rate, but only on its own written application approved by the director, so deviations upward are the employer's request, not the insurer's.⁠2 Employers can buy from any authorized insurer, including CopperPoint, which says it was founded in 1925 as the State Compensation Fund and is now a mutual holding company.⁠9

The official cost data match the string of rate cuts. NASI estimates Arizona employers spent $0.62 per $100 of covered wages on comp in 2023, against $0.78 in 2019. By our calculation that is a 21% decline, compared with 16% for the national figure over the same years ($1.17 to $0.98), and the 2023 Arizona cost is about 37% below the national one.⁠10 Oregon's ranking, based on manual rates in effect January 1, 2024, puts Arizona 46th most expensive of 51 jurisdictions at an index of $0.70 per $100 of payroll, 64% of the median state (Georgia, $1.09).⁠11 Health coverage is the weaker point for small firms. In AHRQ's 2025 survey, 26.3% of Arizona private-sector establishments with fewer than 50 employees offered health insurance, against 32.1% nationally. Where they did, the average single premium was $8,640 against $9,034 nationally, about 4% lower by our calculation.⁠12

Three rules do more to set your cost than the statewide rate change. First, the contractor chain: when an employer has work done by a contractor it supervises or controls, and the work is a regular part of its own business, the contractor, the subcontractor and their employees count as the employer's employees for comp, so an uninsured sub's workers can become your responsibility.⁠3 Second, the independent-contractor agreement: a signed, dated written agreement that meets the statute's eight conditions and carries a disclosure that the contractor gets no comp benefits creates a rebuttable presumption of independent status, and the carrier may not charge premium on payments covered by a complete agreement unless the presumption is overcome.⁠3 Third, ownership: working LLC members owning under 50% are employees, while those owning 50% or more, and working partners, are covered only if the carrier accepts them by endorsement.⁠4

Auto is the other fixed cost. The statute sets no PIP requirement, and the minimum liability limits for policies issued or renewed since July 1, 2020 are 25/50/15, up from 15/30/10, which still applies to holders of self-insurance certificates.⁠7 Budget your renewal from your own class, payroll and mod rather than the 6.7% average: the figure is an overall average that your class code can beat or miss, and DIFI's release does not give class-level changes.⁠1 As our own illustration, a policy that cost $20,000 in 2025 and moved exactly with the average, with no change in payroll or mod, would cost about $18,660 in 2026.

Workers’ compensation in Arizona

Every employer with workers regularly employed in the same business or establishment under a contract of hire must cover them, including part-year and seasonal work in the usual trade, and public bodies must insure too.⁠3 Domestic servants are excluded, though their employer may opt in.⁠3

Who is exempt

  • Domestic servants (employer may elect coverage)⁠3
  • Independent contractors with a compliant written agreement: a rebuttable presumption, not an automatic exemption⁠3
  • Sole proprietors who sign a waiver with the hiring employer's carrier (A.R.S. 23-961(N)); the waiver covers the sole proprietor, not their employees⁠5
  • Working partners: covered only if the partnership's carrier accepts them by endorsement⁠4
  • Working LLC members owning 50% or more: covered only if the carrier accepts by endorsement; members owning under 50% are employees⁠4

Buying coverage and who sets the rates

Buy a policy from an insurer authorized by DIFI to write comp, self-insure with proof of financial ability to the Industrial Commission of Arizona, or join a commission-approved workers' compensation pool.⁠5 Insurers use filed NCCI rates, and an employer can pay above the filed rate only on its own approved written request.⁠2 No state fund exists today; CopperPoint, a mutual holding company, began in 1925 as the State Compensation Fund.⁠9

Latest rate decision (1 Jan 2026): DIFI reviewed NCCI's annual filing for a 6.7% reduction in workers' compensation rates, effective Jan. 1, 2026, the 12th consecutive annual decrease. DIFI's release gives no class-level changes and says nothing about a 2027 filing. Official notice.

An employer may furnish the Industrial Commission proof of financial ability to pay compensation directly, or belong to a commission-approved workers' compensation pool. The commission may require a deposit or other security of not less than $100,000 for comp liabilities, and self-insurers and pools pay an annual tax of up to 3% of the premium they would have paid if fully insured.⁠5

Penalties for going without

An employer that fails to insure loses the benefits of the comp chapter for the period, can be sued under other law without the defenses of assumption of risk or contributory negligence, and injury alone is prima facie evidence of its negligence.⁠6 The Commission may assess a civil penalty up to $1,000, then up to $5,000 for a second failure within five years and up to $10,000 for a third or later one.⁠6 If the special fund pays an uninsured employer's claim, the employer owes it back plus a penalty of 10% of the amount or $1,000, whichever is greater, plus interest, and the award is a judgment and lien.⁠6 The Commission can also seek a court injunction closing the business until it complies.⁠6

What Arizona employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearArizonaUnited States
2019$0.78$1.17
2020$0.70$1.08
2021$0.66$1.01
2022$0.63$1.00
2023$0.62$0.98

Employer cost per $100 of covered wages: premiums paid by insured employers plus benefits and administrative costs of self-insured employers, divided by the wages of workers covered by workers’ compensation. The United States figure is NASI’s national total, which includes federal programs. Source: National Academy of Social Insurance (NASI), published 11 Aug 2026.

Oregon’s biennial comparison of workers’ comp rates puts Arizona’s index for rates in effect on 1 January 2024 at $0.70 per $100 of payroll, 36% below the national median of $1.09 (rank 46 of 51, where 1 is the most expensive). The index prices the same 50 risk classes, weighted by Oregon payroll, in every state, so it compares rate levels rather than what employers actually pay. Compare every state.

Employer health insurance in Arizona

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureArizonaFirms under 50United States
Single coverage, total premium$7,734$8,640$9,025
Family coverage, total premium$23,143$22,869$26,281
Employee share, single$1,837–$1,817
Employers offering coverage45.2%26.3%49.2%

Average total annual premium per enrolled employee at private-sector establishments that offer health insurance; the offer rate is the share of establishments offering coverage. Small firms have fewer than 50 employees. Source: Agency for Healthcare Research and Quality (AHRQ), Center for Financing, Access and Cost Trends, 2025 survey year. All states.

Commercial auto in Arizona

Every vehicle registered in Arizona, including business vehicles, must carry at least 25/50/15 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

For policies issued or renewed on or after July 1, 2020: $25,000 per person and $50,000 per accident for bodily injury, $15,000 for property damage. Earlier limits of 15/30/10 still apply to holders of self-insurance certificates. No personal injury protection requirement appears in the statute. No change since 2020 was found in the current statute text.

Trucks and buses used in interstate commerce must also meet federal minimums of $750,000 to $5 million: see commercial auto minimums and what commercial auto costs.

Other Arizona rules that affect insurance costs

Contractor license bonds

Before granting a contractor's license, the Registrar of Contractors requires a surety bond or cash deposit, and it must be in force for renewal. For general commercial contractors the statutory range runs from a flat $5,000 for under $150,000 of annual volume to $50,000-$100,000 at $10 million or more.⁠8 A bond is not liability or comp coverage.

Uninsured subcontractors

A hiring employer that supervises or controls a contractor's work, when the work is a regular part of its own business, is treated as the employer of the contractor's and subcontractor's employees for comp.⁠3 Collect certificates before work starts, because an uninsured sub's claim can attach to you.

Arizona compared with its neighbors

Workers’ comp and health insurance costs, Arizona and neighboring states
Arizona$0.62$0.70$7,734
California$1.43$1.86$9,162
Nevada$0.87$0.73$8,215
Utah$0.58$0.63$8,448
Colorado$0.64$1.05$8,816
New Mexico$0.98$1.05$9,447

Sources

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National figures: NASI (employer comp costs), Oregon DCBS (rate index), AHRQ MEPS-IC (health premiums).

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Other states

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