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Washington business insurance: requirements and costs

Washington is one of the few monopolistic workers' comp states: employers insure with the state fund run by the Department of Labor & Industries (L&I) or qualify as self-insurers, and private carriers cannot sell the coverage.⁠1 L&I sets the rates itself and charges them per hour worked, not per $100 of payroll.⁠3⁠5 The 2026 average increase was 4.9%, and L&I has proposed another 4.9% for 2027.⁠5⁠6

Checked against 15 sources Last reviewed How we check figures

Washington at a glance

Workers’ comp requiredAll employers with employees; sole proprietors and partners excluded
Where employers buy itState fund only (monopolistic) (Washington State Fund (L&I))
Rates set byWashington Department of Labor & Industries (not NCCI)
Employer comp cost, 2023$1.17 per $100 of covered wages (US $0.98)
Comp rate index, 2024$1.35, ranked 12 of 51 (1 = most expensive)
Employer health premium, 2025$8,712 single, $27,618 family (average total premium)
Auto liability minimum25/50/10
Payroll insurance programsWashington Paid Family and Medical Leave

Because L&I is both insurer and rate-setter, there is no rating bureau filing, no choice of carrier and no residual market. The law requires L&I to classify every occupation or industry by hazard and fix basic premium rates for each.⁠3 L&I's own explanation of the hours-based system is that when wages rise, premiums collected do not rise with them, so the agency raises rates to keep up with wage and medical cost inflation.⁠5⁠6 The 2026 increase averaged 4.9%, about $1.37 more a week per full-time position, and L&I said it was less than the agency expects to need for 2026 claim costs, so it will draw on its contingency reserve for the difference. L&I describes 4.9% as an all-industry average: your class and claims history can move your rate either way.⁠5 Its 2027 proposal is also 4.9%, about $1.44 a week per full-time employee, with public hearings on October 27, 28 and 29, 2026 and final rates to be adopted on November 30 for January 1, 2027.⁠6 That is a proposal, not an approved rate.

Workers pay part of the bill. L&I says employers pay about 75% of the premium and workers about 25%, and the statute requires a non-self-insured employer to deduct from each worker's pay one-half of the amount it must pay for medical benefits in that risk classification.⁠5⁠7 The same statute makes it unlawful to deduct or collect any other part of the premium from workers unless the law allows it.⁠7 Budget the full hourly rate as your payroll-system cost, then recover only the amount L&I reports as the worker share.

On the national measures, Washington is above average but falling. NASI estimates employers spent $1.17 per $100 of covered wages in 2023, down from $1.34 in 2019. By our calculation that is a 13% drop, against 16% nationally ($0.98 in 2023).⁠13 Oregon's study of manual rates in effect January 1, 2024 ranked Washington 12th most expensive of 51 jurisdictions, at an index of $1.35 per $100 of payroll, 123% of the median state's.⁠14 Health coverage is thinner among small employers than the national figure suggests: AHRQ's 2025 survey found 34.6% of Washington private-sector establishments in firms with fewer than 50 employees offered health insurance, against 32.1% nationally. At those that did, the average single premium was $9,146 (US $9,034) and the employee share averaged $1,088 (US $1,924).⁠15

Two other costs are specific to Washington. Paid Family and Medical Leave premiums are shared with employees, and the vehicle minimums below set the floor for commercial auto. Contractors face a registration bond and a liability insurance floor, covered in the notes.

Workers’ compensation in Washington

Every employer with workers in covered employment must insure with the state fund or qualify as a self-insurer.⁠1 Coverage is mandatory for all employment except the listed exclusions, with no minimum headcount.⁠2

Who is exempt

  • Sole proprietors and partners
  • Members of a limited liability company who would qualify for the sole-proprietor or partner exclusion, if management is vested in the members (other qualifying forms of LLC management also apply)
  • Officers of a corporation who are also directors and shareholders and run daily management without manual labor; a non-public corporation may instead exempt eight or fewer bona fide officers, or any number if all are related by blood within the third degree or by marriage
  • Domestic servants in a private home where the employer has fewer than two employees regularly working 40 or more hours a week
  • Gardening, maintenance or repair in or about the employer's private home
  • Children under 18 employed by their parents in agricultural activities on the family farm
  • Jockeys at race meets licensed by the Washington Horse Racing Commission
  • Booth renters (who may elect coverage)
  • Other narrow exclusions in RCW 51.12.020, including musicians or entertainers on a single engagement, newspaper carriers, insurance producers, and owner-operators of for-hire vehicles, limousines and taxicabs

Buying coverage and who sets the rates

Directly from the L&I state fund; private insurers cannot write Washington comp. Employers that qualify as self-insurers under Title 51 RCW may self-insure instead.⁠1 Premiums are based on hours worked.⁠5

Latest rate decision (1 Jan 2026): L&I adopted a 4.9% average increase in the hourly rate for 2026 (about $1.37 a week more per full-time position; individual industries may be higher or lower). Proposed for Jan. 1, 2027: another 4.9% average, with hearings Oct. 27-29, 2026 and adoption planned Nov. 30; not yet approved. Official notice.

Employers can qualify as self-insurers under Title 51 RCW.⁠1

Washington’s state fund publishes its full rate schedule as public law: look up every Washington class rate or try the premium calculator.

Penalties for going without

Doing business subject to the Industrial Insurance Act without a certificate of coverage is a gross misdemeanor, for the employer and for any officer who causes or permits it. Continuing after L&I has revoked the certificate is a class C felony.⁠4

What Washington employers pay

Employer workers’ compensation costs per $100 of covered wages, 2019–2023
YearWashingtonUnited States
2019$1.34$1.17
2020$1.20$1.08
2021$1.19$1.01
2022$1.17$1.00
2023$1.17$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 Washington’s index for rates in effect on 1 January 2024 at $1.35 per $100 of payroll, 23% above the national median of $1.09 (rank 12 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.

Disability and paid leave insurance

Washington runs a payroll-funded program that employers must register for, fund or insure on top of workers’ compensation.

Washington disability and paid leave programs, 2026
Program2026 contributionEmployer’s part
Washington Paid Family and Medical Leave1.13% of wages in 2026, up to the Social Security wage cap ($184,500)Employers pay 28.57% of the premium and employees 71.43%, which is about 0.32% and 0.81% of wages by our calculation. Employers with fewer than 50 employees (as classified by ESD for 2025) owe no employer share but must still collect the employee share or pay it for them.⁠8

The program is run by the Employment Security Department, not private insurers. ESD recalculates the rate each October, and began applying penalties to past-due reports on Aug. 1, 2026.⁠8

Employer health insurance in Washington

Average annual premium per enrolled employee at private-sector employers, 2025
MeasureWashingtonFirms under 50United States
Single coverage, total premium$8,712$9,146$9,025
Family coverage, total premium$27,618$22,978$26,281
Employee share, single$1,381–$1,817
Employers offering coverage49.7%34.6%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 Washington

Every vehicle registered in Washington, including business vehicles, must carry at least 25/50/10 in liability limits (bodily injury per person / per accident / property damage, in thousands of dollars). Official source.

Minimum liability for registered vehicles: $25,000 per person and $50,000 per accident for bodily injury, $10,000 for property damage.⁠9⁠10 No 2025-2026 change was found in the statute. Not-carrying-proof is a traffic infraction.⁠10

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 Washington rules that affect insurance costs

Contractor registration bond and insurance

Registered contractors must file a surety bond of $30,000 (general contractor) or $15,000 (specialty contractor).⁠11 They must also carry liability insurance or an assigned account of $50,000 for property damage and $100,000 per person and $200,000 per accident for injury or death.⁠12

Hours, not payroll

L&I premiums are based on hours worked, so keep hours records per worker and class; the rate in your class is a per-hour figure, not a percentage of wages.⁠5 The published class rates are on the Washington rates page.

Washington compared with its neighbors

Workers’ comp and health insurance costs, Washington and neighboring states
Washington$1.17$1.35$8,712
Oregon$0.97$0.89$9,225
Idaho$1.34$1.10$8,770

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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