Arizona Workers’ Compensation Rules

An A-Z guide on everything you need to know before you purchase an Arizona Workers' Comp Insurance Policy

According to Arizona workers’ compensation rules, any business with employees in the state must carry workers’ compensation coverage. This applies even if the business has only a single employee.

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Part time employees also have to be covered.

The following are exempt:

  • Casual/occasional workers
  • Domestic workers only employed in a home
  • Business partners
  • Intermittent employees
  • Landscapers and gardeners
  • Maids and nannies
  • Corporate officers if they choose to reject coverage
  • LLC members who choose to reject coverage

Is workers’ comp insurance required in Arizona?

Yes, the Arizona workers’ compensation rules make it clear that any business with even a single employee is required to carry workers’ compensation insurance. This includes full-time and part-time employees.

Are self-employed professionals required to carry workers’ compensation in Arizona?

No, self-employed professionals (independent contractors and sole proprietors) are not required to purchase coverage under current Arizona workers’ compensation rules. 

However, if you hire an employee, that changes. In some cases, contractors may also be required to purchase coverage to work with other contractors. 

Who is exempt from Arizona workers’ compensation rules?

While Arizona has stringent requirements regarding workers’ compensation coverage, there are some important exemptions, including casual/occasional workers, domestic workers only employed in a home, business partners, intermittent employees, landscapers and gardeners. 

In addition, corporate officers and LLC members can choose to reject coverage.

How much is workers’ comp coverage in Arizona?

Your Arizona workers’ comp rate will depend on the following factors:

  • The type of business you have
  • The size of your payroll
  • Your safety record
  • Claim history
workers comp policy cost

How can Arizona small business owners save money on workers' comp?

Small business owners who want to comply with the current Arizona workers’ compensation rules but are looking to reduce the cost of your premiums can do the following:

How does workman’s comp work in Arizona?

Obtaining coverage to comply with Arizona workers’ compensation rules is relatively simple and the process of using it is, too. 

First, you’ll buy a policy that’s based on your estimated annual payroll. Note the word “estimated”, because it’s important later.

Once you’ve purchased a policy and paid the premium, your employees are covered for a full year. 

At the end of the year, your insurance company will conduct an audit to see if the estimated payroll was accurate. If it was too high, you’ll get a refund of the difference. If it was too low, you’ll need to pay the extra.

What does workers’ comp cover in Arizona?

Workers who file a workers' comp claim in Arizona can receive benefits for the following:

workers comp covers medical bills

Medical bills

workers comp covers lost wages

Lost Wages

Workers' comp coverage also protects employers from legal action. This means that if an employee sues your business because of a workplace injury, the insurance will cover the legal costs of the case.

How do get workers’ comp insurance in Arizona

Getting workers’ comp insurance in Arizona should not be particularly difficult. You have three options available to you:

  1. Buy from an insurance company

    This is the most common path for the majority of Arizona businesses. At Kickstand Insurance, we can give you an online quote on worker’s compensation in just minutes.
  2. Buy from the state fund

    Some businesses cannot obtain workers’ comp insurance from a private insurance company due to the significant risks their workers face. Others may be denied for different reasons.

    However, the state fund, administered by CopperPoint Mutual, can offer competitive rates.
  3. Go the self-insurance route

    Large businesses with the liquidity to cover workers’ compensation costs themselves can forgo buying a policy and self-insure. You’ll need to meet Arizona’s self-insurance requirements and have a minimum annual payroll of $2 million.

What happens if I fail to purchase workers’ comp insurance in AZ?

Under Arizona workers’ compensation rules, businesses that fail to purchase a workers’ comp policy can face significant penalties. 

These include:

  • Lawsuits from employees injured on the job
  • Reimbursement of benefits paid by the state’s ICA plus 10% of the costs or $1,000, whichever is more
  • Additional penalties of $1,000, which can climb as high as $10,000
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FAQS

What are workers’ comp death benefits in AZ?

Under current Arizona workers’ compensation rules, eligible survivors (spouses, children under 18, children over 18 but enrolled in school full-time, and children unable to support themselves) are eligible for up to 67% of the worker’s average monthly earnings. 

The state’s mandated death benefits also include up to $5,000 for funeral/burial costs.

How do workers’ comp settlements work in AZ?

Workers’ comp settlements were not available in Arizona until 2018. Under current Arizona workers’ compensation rules, only full and final settlements are allowed. 

In these cases, the employee, employer, and insurer settle on an agreement amount that includes projected future medical costs, as well as a statement that all parties have tried to protect Medicare interests. 

In some cases, this may require creating a Medicare savings account.

What are the statutes of limitations under Arizona workers’ compensation rules?

Employees are required to notify employers immediately of an injury or on their knowledge of a work-related disease/illness. They have one year from the date of injury/diagnosis to file a claim. 

How do I get a workers’ comp insurance policy with Kickstand Insurance?

Start by filling out a short online form about your business. We’ll use that info to get you an estimated quote. Then, one of our experienced agents will contact you to review the quote and make sure you are getting the absolutely lowest rate possible for your business. Once the quote is finalized, you’re ready to buy the policy - often with coverage starting that day!

Learn more about Workers' Comp in Arizona

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