In Arizona, workers compensation is priced on your payroll, the kind of work your team does, and your claims history, then quoted by private insurers competing for your business. Most small Arizona employers pay a few hundred to a few thousand dollars per employee per year, and rates have been trending down for over a decade.
Who this is for: Arizona owners who want to understand what drives their price and roughly what to budget.
The short version
- Payroll is the base. Premium is calculated per 100 dollars of payroll in each kind of work you do.
- The type of work sets the rate. Your price depends heavily on the category your work falls into for pricing, called the class code.
- Your claims history moves it. A score based on past claims, called the experience modification rate, raises or lowers your cost.
- Private carriers compete. Arizona has no state fund, so insurers set their own final rates over a common baseline, which means shopping pays off.
- Rates are falling. As of mid-2026, Arizona workers comp rates fell for the twelfth straight year, effective January 1, 2026.
What drives your Arizona price
A handful of factors explain most of the number. Understanding them is how you avoid overpaying.
| Factor | How it affects price |
|---|---|
| Payroll | The base of the calculation; premium runs per 100 dollars of payroll |
| Type of work (the class code) | Riskier trades carry a higher rate than office work |
| Claims history (the experience modification rate) | A record of claims raises your cost; a clean record lowers it |
| How work is split across categories | Miscategorized payroll can overcharge you for years |
| Carrier and market | Insurers apply their own multiplier to the shared baseline, so quotes vary |
How Arizona rates are set
Arizona is what the industry calls an NCCI state. The rating bureau NCCI collects payroll and claims data and files advisory baseline costs, called loss costs, for each kind of work. Each insurer then applies its own multiplier to those loss costs to set the rate it charges, and the state insurance regulator, the Department of Insurance and Financial Institutions, reviews the filing. Because carriers set their own multipliers, two insurers can quote the same business quite differently, which is exactly why shopping the market matters. As of mid-2026, the regulator approved a decrease of about 6.7 percent to voluntary market rates and about 6.6 percent to the fallback market, effective January 1, 2026, continuing a run of twelve straight annual decreases.
Illustrative price ranges
These are rough annual ranges for small Arizona employers, not quotes. Your real number depends on payroll, the exact work, and your claims record.
| Business type | Rough annual workers comp range |
|---|---|
| Office or professional services | $500 to $2,200 |
| Retail store | $1,100 to $4,600 |
| Restaurant or cafe | $2,200 to $9,000 |
| Cleaning or janitorial | $2,600 to $10,000 |
| Landscaping or small contracting | $3,000 to $13,000 |
A Scottsdale example
Illustrative, not a quote. A Scottsdale HVAC company with three installers and one office manager gets very different quotes from two carriers because each applies its own multiplier to the same baseline. By splitting the office manager's payroll out of the higher installer category and cleaning up a past claim on the record, the company lowers its price without changing its coverage. We review the categories and the claims score before you buy so you are not overpaying. See our workers comp for HVAC contractors page.
Real questions Arizona owners ask
How much does workers comp cost in Arizona?
Most small Arizona employers pay a few hundred to a few thousand dollars per employee per year. The exact price depends on your payroll, the kind of work, and your claims history.
What determines my workers comp rate in Arizona?
Your payroll, the category your work falls into for pricing, and your claims history are the big three. Riskier trades cost more than office work, and a record of claims raises the price.
Why do two Arizona carriers quote such different prices?
Arizona carriers start from a shared baseline but each applies its own multiplier, so the same business can get quite different quotes. That is why shopping several carriers usually pays off.
Are Arizona workers comp rates going up or down?
Down. As of mid-2026, rates fell for the twelfth straight year, with a decrease of about 6.7 percent to voluntary market rates effective January 1, 2026, subject to the regulator's review each cycle.
How is the price actually calculated?
Premium runs per 100 dollars of payroll in each kind of work you do, adjusted by your claims-history score. Splitting payroll into the correct categories keeps you from overpaying.
Can I lower my workers comp cost in Arizona?
Often yes. Making sure payroll is in the right categories, improving your claims record, and shopping carriers can all bring the price down without cutting your coverage.
Does Arizona have a state fund with set prices?
No. Arizona has no state fund; the old one was privatized in 2013. Private insurers compete and set their own final rates over a common baseline, so comparing quotes matters.
Why Arizona owners choose Morrow
- We shop the right market for you. Arizona has no state fund, so you buy workers comp from private insurers on the open market, and we compare several to find your best rate. If your work is hard to place and no insurer will take you, a guaranteed state backstop (the NCCI-run assigned risk plan) will still cover you.
- We catch pricing mistakes. Your price depends heavily on the category your work falls into for pricing (the class code). Put people in the wrong category and you overpay for years. We review your payroll and classifications before you buy.
- Proof of coverage, fast. Need a certificate (proof of coverage) for a general contractor or a landlord before Monday? We turn those around the same business day for most carriers.
- We help lower the score that drives your price. Insurers give you a score based on your past claims that raises or lowers your cost (the experience modification rate). We review it each year, flag errors, and connect you with return-to-work and safety resources that bring it down.
- Real people when a claim happens. When someone gets hurt, we stay involved through the life of the claim, not just at renewal.
Related Arizona guides
Every Arizona business is set up a little differently. These companion guides answer the same question for other situations, plus the national explainers behind the terms used here.
- Business insurance in Arizona (start here)
- Workers comp: the owner's overview
- I own an LLC: do I need workers comp?
- I'm a sole proprietor: do I need workers comp?
- I own a corporation (C-corp or S-corp): do I need it?
- We're a partnership: do we need workers comp?
- We're a nonprofit: do we need workers comp?
- My workers are 1099: do I still need it?
- Only part-time or seasonal staff: do I need it?
- I only employ family: do I need workers comp?
- Remote or out-of-state staff: do I need coverage?
- What happens if I don't carry workers comp?
- How do I get workers comp (even if turned down)?
- What insurance do I need for a contractor license?
- Workers compensation insurance, explained
- What workers comp costs (national guide)
- Glossary: workers comp class code
- What is an experience mod, and how do I lower it?
- Arizona HVAC workers comp
This guide is general information, not legal advice. Arizona rules and penalty amounts can change, so verify current requirements with the Industrial Commission of Arizona or a licensed advisor before you rely on them. Last updated: July 2026.