Workers' compensation insurance is a state-regulated insurance product that pays medical bills and a portion of lost wages to employees injured during the course of employment. It is required by state law in most states the moment an employer has at least one employee (rules vary on sole proprietors with no employees and on small subcontractor arrangements).
For construction trades, premiums are calculated by NCCI (or state-specific bureau) classification code multiplied by an experience modifier (Mod) and the wage base. Construction trades typically run 5 to 15% of payroll depending on trade and state. The Mod factor is 1.0 for an average employer; below 1.0 for employers with better-than-average claim history (which earns premium discounts) and above 1.0 for worse-than-average. Maintaining a strong safety program reduces the Mod and lowers premiums substantially over time.