Alabama Workers' Comp Rate Calculator
Estimate an Alabama workers' comp premium from payroll, a rate per $100 and your experience mod. Defaults are explained under the rate field.
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An estimate, not a quote. How this calculator works.
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Workers' comp in Alabama: what's different
Alabama has no state fund. Employers buy a policy from an approved private insurer, join a group self-insurance fund, or qualify to self-insure. The Workers' Compensation Division of the state labor department (renamed the Department of Workforce by Act 2024-115) runs the system. Rates come from NCCI advisory loss costs, and the Commissioner of Insurance must approve rate and class filings before they take effect.
Who must carry coverage
The rule turns on headcount. An employer that regularly has fewer than five employees in any one business is outside the Alabama Workers' Compensation Law. The Workers' Compensation Division counts full-time and part-time workers toward that five, and corporate officers count too.
Watch these details:
- New home construction. The under-five exemption does not apply to a business that builds, or helps build on-site, new single-family detached homes. A small residential builder needs coverage even with one or two workers.
- Corporate officers and LLC members. An officer or an individual LLC member can opt out by filing a written certification with the company's insurer. The exemption takes effect on the first day of the next calendar month. It does not remove the person from the headcount used for the five-employee test, and the business still has to cover everyone else.
- Exempt categories. The law does not reach employers of domestic employees, farm laborers, or casual workers outside the usual course of the business, or towns under 2,000 people.
- Choosing coverage anyway. A small employer, farm employer, or household employer may accept the law by filing written notice with the department and posting a copy at the business. An employer that withdraws must tell each employee in writing and post a notice saying coverage is not available.
- Not employees. Real estate agents licensed under a broker and qualifying product demonstrators are not employees under the act.
Where coverage comes from
The division lists these options:
- Voluntary market. An approved insurer, sold through a licensed agent. The Alabama Department of Insurance approves the carriers, their policies, and their agents.
- Group self-insurance fund. Employers pool their liabilities by agreement. The labor department approves and regulates these funds. If a fund becomes insolvent, members can be assessed to cover the shortfall.
- Individual self-insurance. The division lists four financial tests: audited financial statements, at least $5 million in net worth, current assets at least equal to current liabilities, and positive net income. The department issues a self-insurance certificate and can revoke it after 60 days' notice and a hearing.
The division also warns that an employee leasing arrangement is not a substitute for coverage, and a noncompliant leasing company can leave you as exposed as having no policy.
Who sets rates
NCCI files Alabama voluntary loss costs, assigned risk rates, and rating values each year. Under Code section 25-5-8, insurers file their classifications and rates with the Department of Insurance, and none take effect until the Commissioner approves them as reasonable, adequate, and not excessive. The Commissioner must hold a public hearing before approving any bureau loss cost or rate filing.
The latest filing carries a March 1, 2026 effective date. NCCI submitted it on October 7, 2025 and asked for an average 4.5% decrease in voluntary loss costs and a 3.6% decrease in assigned risk rates. The Department of Insurance held its hearing on December 4, 2025, and its website now posts the March 1, 2026 advisory loss costs and assigned risk rates. NCCI's pages note that advisory loss costs are not rates: they leave out every expense except loss adjustment expense and loss-based assessments.
Experience rating
The Alabama loss cost pages say a business qualifies for intrastate experience rating when it meets the state's premium eligibility amount. They refer employers to the Experience Rating Plan Manual for the current amount, which varies by rating effective date.
If no insurer will write you
The involuntary market is the Assigned Risk Pool, administered by NCCI. You must be turned down by two insurers and apply through your agent with proof of those refusals. The division warns that pool coverage costs more and you do not get to pick the carrier. For roofing (code 5551), the March 1, 2026 assigned risk rate is $10.943 per $100 of payroll, with a $1,500 minimum premium and a $160 expense constant.
Penalties for going uninsured
An employer that fails to secure coverage commits a misdemeanor punishable by a fine of $100 to $1,000. It is also liable for twice the compensation the injured worker would otherwise have received. The labor secretary may seek a court injunction, and the court may add civil penalties of up to $100 a day. Getting coverage later is not a defense.
Your ongoing obligations
- Post the notice. Code section 25-5-290(d) requires the state workers' comp information poster (Form WCC#1) in one or more conspicuous places. It has blanks for your insurer's name and phone number and shows the division's toll-free line, 1-800-528-5166.
- Report injuries. Keep a record of every work injury for which compensation is claimed or paid. File WC Form 2, the Employer's First Report of Injury (the printed form is headed WCC Form 2), with the state within 15 days of the injury or of learning about it. The division's claim manual ties that filing to injuries with more than three days lost from work.
- Later reports. The employer, insurer, or claims administrator also files a Supplementary Report (WC Form 3) within 10 days of the first payment and a Claim Summary (WC Form 4) within 10 days after payments end.
- Medical care. The employer picks the treating physician. A worker unhappy with that doctor can choose a second one from a panel of four the employer names.
- Employee notice. Workers must report an accident within five days, and in every case within 90 days.
Worked example: how the calculator estimates premium
Premium = (payroll / 100) x rate per $100 x experience mod
The starting point is NCCI's advisory loss cost for code 5551 (roofing), $4.243 per $100 of payroll, effective March 1, 2026. That is a loss cost, not a rate. NCCI's filing summary says carriers typically adjust approved loss costs for expenses with a loss cost multiplier, so the example applies an illustrative one. The LCM, payroll, and mod are all hypothetical.
- Annual payroll (hypothetical): $250,000
- Code 5551 loss cost: $4.243
- Loss cost multiplier (illustrative): 1.40
- Experience mod (hypothetical): 0.95
Step by step
- Rate: $4.243 x 1.40 = $5.9402 per $100
- Payroll in hundreds: $250,000 / 100 = 2,500
- Manual premium: 2,500 x $5.9402 = $14,850.50
- Apply the mod: $14,850.50 x 0.95 = $14,107.98
For comparison, the same payroll at the assigned risk rate of $10.943 gives 2,500 x $10.943 = $27,357.50 before the mod. The 2025 roofing loss cost was $4.86, so check which year's figures apply to your policy.
Frequently asked questions
Do I need workers' comp with four employees in Alabama?
Usually not. The law applies to employers with five or more regular employees, counting part-time workers and corporate officers. The exception is new single-family home construction, which needs coverage below five.
Does Alabama have a state fund?
No. You can buy from an approved private insurer, join a group self-insurance fund, or self-insure if you qualify. Employers turned down twice can apply to the NCCI-administered Assigned Risk Pool.
Can I exclude myself as a corporate officer or LLC member?
Yes. File a written certification of exemption with your insurer. It starts on the first day of the next month, and you still count toward the five-employee threshold.
What does going uninsured cost?
A misdemeanor fine of $100 to $1,000, possible civil penalties up to $100 a day, and liability for double the compensation owed to an injured worker.
How fast must I report an injury?
File WC Form 2 within 15 days after the injury occurs and you know about it.
Official sources
- Alabama Department of Labor (Workforce), Workers' Compensation Division
- Workers' Compensation Division, Insurance Requirement Information
- Workers' Compensation Division, Guide to Benefits and Claims Filing
- Workers' Compensation Division, Basic Claim Handling Manual (Dec. 1, 2025)
- Workers' Compensation Division, Employer's First Report of Injury (WC Form 2)
- Workers' Compensation Division, Workers' Compensation Information poster (Form WCC#1)
- Code of Alabama s.25-2-1.2 (department renamed)
- Code of Alabama s.25-5-4 (injury reports)
- Code of Alabama s.25-5-8 (insurance options, penalties, rate approval)
- Code of Alabama s.25-5-50 (who is covered, exemptions)
- Code of Alabama s.25-5-290 (ombudsman notice posting)
- Alabama Department of Insurance, Workers' Compensation rate pages
- Alabama Department of Insurance, 2026 Advisory Loss Costs (NCCI)
- Alabama Department of Insurance, 2026 Assigned Risk Rates (NCCI)
- Alabama Department of Insurance, 2025 Advisory Loss Costs (NCCI)
- Alabama Department of Insurance, notice of hearing on NCCI's March 1, 2026 filing
- NCCI, Summary of the Proposed Alabama Loss Cost and Assigned Risk Rate Filing Effective March 1, 2026
Sources accessed 2026-10-16.
This is general information, not legal advice. Confirm details with the Alabama Department of Workforce (formerly the Department of Labor), Workers' Compensation Division.
Reviewer: Sam Newland, CFP, Founder of Benefitra. Last updated October 17, 2026. How the calculator works. Editorial policy.