FAQ: Workers' Compensation Insurance in Alabama

Workers' compensation insurance is necessary in Alabama when you have five or more employees. This coverage will help pay for medical expenses for employees who are injured or suffer from occupational illnesses on the job. 

Alabama workers' compensation insurance premiums vary from industry to industry. Rates fall in a low to high range depending on the risk factors associated with each job duty. Below are some workers' compensation rates for some industries in Alabama, per $100 of employer payroll:

IndustryLow CostHigh Cost
Salvage Yard-Automobile Recycling$5.40$13.35
Masonry Construction$5.17$12.79
Door and Window Installers$3.58$8.85
Plumbing Contractors$2.04$5.04
Electrical Work-Electrician$2.18$5.39

In Alabama, workers' compensation insurance is required under state law if you have five or more full-time or part-time employees. If you have fewer than five staff members, you can still obtain workers' compensation insurance, and most advisers recommend it. 

Your Alabama workers' compensation insurance will cover employees who are injured or become ill on the job. More specifically, some of the situations where coverage applies include the following: 

  • Traumatic injuries
  • Repetitive injuries
  • Some mental or cognitive injuries
  • Occupational illnesses/diseases

There are exclusions to the coverage under your Alabama workers' compensation insurance, and they are as follows: 

  • Intentional injuries or illnesses
  • Injuries or illnesses sustained outside of work
  • Injuries or illnesses sustained while committing a crime
  • Injuries or illnesses sustained under the influence of drugs or alcohol


When you have employees, another entity, government, or individual you work with may require evidence of insurance. Your licensed insurance agent can obtain a certificate of coverage for your workers' compensation insurance and other policies. 

Working with an independent insurance agent to secure your workers' compensation insurance is important in Alabama. They work with dozens of top-rated carriers and can accommodate many risks. They can also find you competitive pricing on coverage, so you don't break the bank.

Like most other states, Alabama does not count workers' compensation benefits received by employees as taxable income.

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National Average Cost of Workers' Compensation Insurance

Healthcare $1,825 Per $100,000 payroll

Retail Trade $2,850 Per $100,000 payroll

Construction $7,430 Per $100,000 payroll

Workers' Compensation Insurance Laws in Alabama

In Alabama, you must carry the minimum liability limits for your workers' compensation coverage when you have five or more employees. These employees could be full-time or part-time, and coverage is necessary to avoid fines. If you have under the five-employee count, coverage is not mandatory legally. However, it's needed if you want to have proper protection for your business and risks associated with having a staff.

 

Common Workers' Compensation Claims in Alabama

The Top 5 industries with the most fatal occupational injuries:

  1.  Construction
  2. Transportation and warehousing
  3. Manufacturing
  4. Crop farming
  5. Landscaping


The Top 6 fatal occupational injuries by incident

  1. Violence and other injuries by persons or animals
  2. Transportation incidents
  3. Fires or explosions
  4. Falls, slips, trips
  5. Exposure to harmful substances or environments
  6. Contact with objects and equipment

According to statistical data, 84 workers' compensation claims were fatal in Alabama in one recent year.