All states require all employers to carry Workers' Compensation insurance and each state has individual laws that must be met.

At the very minimum, Workers' Compensation insurance policies will cover an employee's medical expenses and reimburse him or her for some percentage of lost wages.

Almost all states are "open market", which means the coverage is underwritten by private insurers; and some states are "closed" or "monopolistic" - the coverage is underwritten by a state-sponsored fund (ND, OH, WA, WV, WY). In states that are open, rates can vary between insurance carriers depending on the type of business the carrier is attempting to attract. In an open market, the rates for workers' compensation are competitive.

Employers with one or more employees are subject to the provisions of their states Disability Benefits Law. This law provides benefits to employees who may be become disabled because of injuries/sickness off the job or that may arise from other conditions such as pregnancy. Payments for these types of benefits are only allocated for the payment of wages... unlike that of workers' compensation which provides payment for medical costs.

Rates for these policies are dependent on the degree of hazard that each occupation carries. Each occupation is coded and defined by state laws. Premiums are determined by the amount of payroll in each occupation code and is subject to annual audit for verification.