Short answer: In Washington, private insurers can't sell standard workers' compensation. Most employers must buy coverage through the state fund run by the Department of Labor & Industries (L&I) unless L&I certifies them to self-insure. Premiums are generally based on hours worked and risk class. Employers usually buy separate stop gap coverage for employer liability.
A monopolistic state
Washington is one of a few states with a monopolistic workers' compensation system. According to L&I, employers get industrial insurance through the state fund, or qualify to self-insure. Private insurers don't write standard workers' comp in Washington.
Who must be covered
Most Washington employers must cover their workers, including part-time and seasonal employees. Some workers and business owners may be exempt or have optional coverage, such as certain sole proprietors, partners, LLC members and corporate officers, depending on their role and elections. Check L&I's rules for your business.
How premiums work
Washington premiums are typically calculated from:
- Hours worked by covered employees, rather than payroll dollars
- Risk classification of the work
- Experience factor, based on your claims history
- Employer and, for some funds, employee contributions through payroll deduction
Employers report hours to L&I, usually quarterly. Because premiums are based on hours, accurate time records matter. See what is an experience mod.
Stop gap coverage
The state fund covers workers' benefits, but it doesn't include employer's liability coverage for certain lawsuits by employees. Businesses usually buy stop gap coverage, often as an endorsement to a general liability policy. Contracts often require it. See general liability insurance.
Multistate employers
If you have employees working in other states, you may need coverage in those states from private insurers, plus an endorsement for other states. Coordinate carefully so there are no gaps.
Self-insurance
Large, financially strong employers can apply to L&I to self-insure. Requirements include financial strength and safety programs.
Contractors
Washington contractors must register with L&I, and registration involves bonds and insurance requirements. Hiring unregistered or uninsured subcontractors can make you responsible for their workers' premiums. Check L&I resources. See contractor insurance.
Common scenarios
A Seattle startup hires its first employee. The company opens an L&I account and reports hours.
A Spokane contractor adds employees in Idaho. Idaho coverage comes from the Idaho market; coordinate with L&I and a broker.
A client contract requires employer's liability limits. Stop gap coverage on your general liability policy usually provides this.
A sole proprietor with no employees. Coverage may be optional for the owner. Check L&I's rules.
Key terms
- Monopolistic state: workers' comp is provided through a state fund, not private insurers.
- L&I: Washington's Department of Labor & Industries.
- Stop gap: employer's liability coverage purchased separately in monopolistic states.
- Experience factor: a rating adjustment based on claims history.
Questions to ask your broker
- Are all of my workers reported in the correct L&I risk classes?
- Do I have stop gap coverage, and are its limits high enough?
- Do any employees work in other states, and does my coverage there meet each state's rules?
- How are owners and corporate officers treated, and should any be covered?
- Are my subcontractors properly registered and covered with L&I?
- Does my general liability policy have a stop gap endorsement, or do I need a separate policy?
Answers depend on your industry, payroll hours and where your employees work. Washington's system is different from most states, so make sure any broker you use understands the state fund and stop gap rules. Learn more on our workers' compensation insurance page.
Records and reporting
L&I employers generally report hours worked and pay premiums quarterly. Accurate records of hours, job duties and risk classes help avoid surprises in an L&I audit.
Bottom line
Washington employers don't shop workers' comp the way employers in most states do. Instead, set up and maintain your L&I account correctly, report hours accurately, manage claims and safety to control your experience factor, and buy stop gap coverage separately. If you work across state lines, plan coverage for each state.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in Washington and workers' compensation insurance.
Frequently asked questions
Can I buy workers' comp from a private insurer in Washington?
Generally no. Washington employers get coverage through the L&I state fund or qualify to self-insure.
How are Washington workers' comp premiums calculated?
Typically based on hours worked, risk classification and experience factor.
What is stop gap insurance?
Employer's liability coverage purchased separately in monopolistic states like Washington, often on a general liability policy.
Do Washington sole proprietors need workers' comp?
Coverage may be optional for certain owners. Check L&I's rules.
What if I have employees in other states?
You may need coverage from private insurers in those states. Coordinate with L&I and a broker.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.