States › Workers Comp › Arizona
Arizona Workers Compensation Guide
Last updated: 2026 · Requirements, rates, benefits, and tips for Arizona employers and employees.
Mandatory
Yes
Employee Threshold
1+ employee
Avg. Rate / $100 Payroll
$1.52
Market Type
Private Market Only
Workers Compensation Requirements in Arizona
Arizona requires workers' compensation for all employers with one or more employees. Arizona no longer has a state fund: the former State Compensation Fund of Arizona privatized in 2013 and is now CopperPoint, a private mutual insurer that remains the state’s largest workers’ comp writer. Arizona has relatively moderate workers' comp rates compared to national averages.
Workers Comp Rates in Arizona
The average rate of approximately $1.52 per $100 of payroll is a statewide blended average — actual rates vary significantly by job classification.
For example, an employer with $1 million in payroll at the average rate of $1.52 per $100 would pay approximately $15,200 annually before experience modification adjustments.
Average Workers Comp Rates by City in Arizona
| City | Est. Avg. Rate per $100 Payroll |
|---|---|
| Phoenix | $1.58 |
| Tucson | $1.52 |
| Scottsdale | $1.45 |
| Mesa | $1.55 |
| Chandler | $1.48 |
| Flagstaff | $1.62 |
What Makes Arizona Unique
Arizona’s former state fund, established in 1925 as the State Compensation Fund of Arizona, privatized in 2013 and now operates as CopperPoint, a private mutual. Competition among carriers filing off NCCI loss costs has helped keep Arizona rates moderate.
Arizona No Longer Has a State Fund — and Most Sources Still Say It Does
If you have read that Arizona's state fund is CopperPoint, that is out of date. CopperPoint was SCF Arizona, the state-chartered compensation fund, and it privatized in 2013. It remains the largest workers' compensation writer in Arizona by a wide margin, but it is a private mutual insurer now, not a state entity.
The practical difference matters when you shop. There is no state fund you are obliged to approach first, no guaranteed-market backstop that must accept you, and no state-set rate to start from. Arizona is a fully competitive market: you buy from any licensed private insurer, and every carrier files its own rates off NCCI loss costs. Carriers may also apply credits and debits of up to 25% to filed rates.
Arizona has been an unusually favourable market to shop in. The state recorded its tenth consecutive year of rate decreases in 2024, with a 10.3% reduction effective January 1 of that year, which NCCI attributed to fewer lost-time claims relative to premium and lower medical costs per claim. Rates here sit below the national average. If your policy has auto-renewed through that entire run without a market check, it is worth testing.
Typical 2026 ranges, per $100 of payroll:
| Work type | Approx. rate per $100 payroll |
|---|---|
| Office and clerical | ~$0.50–$1.80 |
| General contracting | ~$3.25–$7.80 |
| Construction (broad) | ~$4.00–$15.00+ |
| Roofing (highest in state) | ~$16–$38 |
Those are starting points, not quotes — your experience modification, payroll size, years in business, and claims history all move the final number. Estimate yours with the workers' comp premium calculator and check your mod with the EMR calculator.
Going Without Coverage Is a Felony Here
Most states treat uninsured operation as a civil matter with fines and stop-work orders. Arizona is materially stricter: willfully and knowingly failing to carry required workers' compensation coverage is a Class 6 felony, punishable by fines up to $10,000 and up to one year in prison. The Industrial Commission of Arizona can additionally seek a court injunction requiring the business to cease operations until coverage is in force, and the uninsured employer remains personally liable for all benefits owed to an injured worker.
The coverage trigger is also broader than many owners assume. Under A.R.S. §23-902, coverage is required for any person who regularly employs workers — effectively from the first employee, with no minimum payroll threshold and no employee-count exemption. Family members on payroll, part-time staff, and seasonal workers all count. Independent contractors, casual or occasional workers, and domestic workers employed only in a home are the main exceptions.
The ICA operates a free public coverage verification tool searchable by business name or FEIN. That cuts both ways: it is how you check a subcontractor, and it is how a general contractor checks you.
Owner Inclusion: Arizona's Defaults Run in Two Directions
This is the detail that produces unexpected audit bills, because the default depends on your entity type and it is not intuitive.
- Sole proprietors and partners are automatically excluded under A.R.S. §23-961(G). They may elect inclusion on the ACORD 130 application.
- Corporate officers, LLC members, and partners in some structures are automatically included and must file a written rejection to get out. Do nothing and you are covered — and generating premium.
- Working shareholders who are not executive officers and own 50% or more of the stock are automatically excluded, and may elect inclusion.
- A shareholder owning less than 50% who is not an executive officer is treated as an employee. They cannot be excluded at all, and the owner payroll caps below do not apply to them.
Where an owner is included, payroll is bracketed rather than taken at actual:
| Owner type | Payroll used for rating |
|---|---|
| Sole proprietor or partner electing inclusion | Minimum $31,200 |
| Corporate officer not excluded | Minimum $65,000, maximum $260,000 |
An officer earning $500,000 generates premium only up to the cap; an officer drawing nothing still generates premium at the floor. These figures are revised periodically, so confirm the current values at renewal.
One warning before you exclude yourself to save premium: most contractors do exclude executive officers, but owner-controlled insurance programmes and some public works contracts require owner inclusion. Check the contract wording before filing the rejection, because reversing it mid-project is slower than it sounds.
Self-Insurance and Subcontractor Exposure
Employers with an annual payroll of at least $2 million may apply to the ICA for self-insurance. In practice that is a large-employer route requiring the financial capacity to fund claims directly.
For everyone else hiring trades, the exposure that actually bites is uninsured subcontractors. Arizona contractors commonly report expired and fraudulent certificates as a live problem, and an uninsured sub's payroll can be charged to your policy at audit as though those workers were yours. Verify each certificate as active through the carrier or the ICA tool rather than accepting the PDF at face value — see how to verify subcontractor insurance for the statutory employer rules behind the charge.
Workers Comp Benefits in Arizona
Arizona provides wage replacement at 66.67% of the average weekly wage, subject to state maximums. Medical benefits are comprehensive. Arizona has a scheduled injury benefit for permanent partial disability based on a schedule of body parts.
Employee Rights in Arizona
Arizona workers can initially select their own physician but the employer may then direct care to an authorized provider. The Industrial Commission of Arizona oversees dispute resolution. Workers have the right to appeal decisions.
How to Reduce Workers Comp Costs in Arizona
Arizona employers benefit from a fully competitive market. Strong safety programs, proper job classification, and return-to-work programs are the most effective cost reduction strategies. Because every carrier applies its own multiplier, comparing quotes gives employers real negotiating leverage.
Frequently Asked Questions
Is workers' comp required in Arizona?
Yes. Under A.R.S. section 23-902 coverage is required for any person who regularly employs workers - effectively from the first employee, with no minimum payroll threshold and no employee-count exemption. Family members on payroll, part-time staff, and seasonal workers all count. Independent contractors, casual or occasional workers, and domestic workers employed only in a home are the main exceptions.
What happens if an Arizona employer has no workers' comp?
Arizona is materially stricter than most states. Willfully and knowingly failing to carry required coverage is a Class 6 felony, punishable by fines up to $10,000 and up to one year in prison. The Industrial Commission of Arizona can also seek a court injunction requiring the business to cease operations until coverage is in force, and the uninsured employer remains personally liable for all benefits owed to an injured worker.
Does Arizona have a state workers' comp fund?
Not any more, though many sources still say it does. CopperPoint was SCF Arizona, the state-chartered compensation fund, and it privatized in 2013. It remains the largest workers' compensation writer in Arizona but is now a private mutual insurer. Arizona is a fully competitive market - there is no state fund you must approach first and no guaranteed-market backstop, so every carrier files its own rates off NCCI loss costs.
How is owner payroll counted for Arizona workers' comp?
It is bracketed rather than taken at actual. A sole proprietor or partner electing inclusion is rated on a minimum payroll of $31,200. A corporate officer who is not excluded is rated on a minimum of $65,000 and a maximum of $260,000, so an officer earning far more generates premium only to the cap while one drawing nothing still generates premium at the floor. These figures are revised periodically.
Are Arizona business owners automatically covered by workers' comp?
It depends on entity type, and the defaults run in opposite directions. Sole proprietors and partners are automatically excluded under A.R.S. section 23-961(G) and may elect inclusion. Corporate officers and LLC members are automatically included and must file a written rejection to get out - do nothing and you are covered and generating premium. A shareholder owning less than 50% who is not an executive officer is treated as an employee and cannot be excluded at all.
How much does workers' comp cost in Arizona?
Rates sit below the national average after ten consecutive years of decreases through 2024, including a 10.3% reduction effective January 2024. Typical 2026 ranges per $100 of payroll are roughly $0.50 to $1.80 for office and clerical work, $3.25 to $7.80 for general contracting, $4 to $15 or more for construction broadly, and $16 to $38 for roofing, which is the highest in the state. Your experience modification, payroll size, and claims history move the final figure.
Related Tools
Related Articles
All Arizona Insurance Guides
Compare requirements, average costs and state rules across every line of coverage in Arizona.
The information on this page is provided for general informational purposes only and reflects estimated industry averages and state requirements as of 2026. Workers compensation laws, rates, and requirements change frequently and vary significantly by employer size, industry, and job classification. Rate estimates shown are blended averages and do not represent actual quotes for any specific employer. Always consult a licensed workers' compensation insurance professional and your state's workers' compensation regulatory agency for current, employer-specific information.