If you’re a contractor operating in New York, New Jersey, or Connecticut, you already know one thing for sure: workers’ compensation insurance is expensive—and it seems to get more expensive every year. Many business owners ask the same question: Why are my rates so high compared to contractors in other states?
The answer lies in a combination of state laws, claim costs, labor structures, and how payroll is classified. Understanding these factors is the first step toward controlling your premiums legally and intelligently.
Let’s break down the four biggest reasons Tri-State contractors pay more for workers’ compensation—and what you can do about it.
1. NY, NJ, and CT Rate Differences: Three States, Three Very Different Systems
Workers’ compensation is regulated at the state level, and New York, New Jersey, and Connecticut each have their own rules, benefit structures, and cost drivers.
New York
New York consistently ranks among the most expensive states for workers’ compensation, especially for construction trades. Why?
- Higher benefit payouts for injured workers
- Strict enforcement and audits
- Severe penalties for noncompliance
- Heavy litigation environment
- Broad definitions of “employee”
Construction classifications such as roofing, masonry, iron work, and carpentry are some of the highest-rated in the country.
New Jersey
New Jersey is slightly less expensive than New York but still costly compared to national averages. Medical costs are high, and claims often stay open longer. NJ also closely scrutinizes subcontractor relationships and independent contractor status, which can result in unexpected payroll being added at audit time.
Connecticut
Connecticut sits between NY and NJ in terms of cost. While enforcement is strong, benefit structures are somewhat more predictable. However, multi-state contractors can run into trouble if they don’t properly list all operating states on their policies.
Bottom line: Contractors working across all three states often face higher blended premiums simply because they operate in some of the most regulated and expensive workers’ comp environments in the country.
2. Labor Law Exposure: Especially the New York Scaffold Law
One major reason New York contractors pay more is Labor Law exposure, especially Labor Law Sections 200, 240, and 241—commonly known as the Scaffold Law.
Under the Scaffold Law:
- Owners and general contractors can be held absolutely liable for gravity-related injuries (falls from ladders, scaffolds, roofs, etc.)
- Even if the worker was careless, liability can still attach
- Claims are larger, more frequent, and harder to defend
This drives up:
- Claim severity
- Litigation costs
- Insurance carrier risk
- Premiums and deductibles
Insurance companies know that one fall claim in New York can turn into a six- or seven-figure exposure. That risk is built directly into workers’ compensation pricing for contractors in the state.
New Jersey and Connecticut do not have an equivalent Scaffold Law, but they still have strong worker protection statutes that contribute to higher costs compared to southern or midwestern states.
3. Union vs. Non-Union Impact
Union contractors often experience very different workers’ comp pricing than non-union contractors, and sometimes for good reason.
Union Contractors:
Pros:
- Structured safety programs
- Formal training and apprenticeship programs
- Predictable payroll reporting
- Stable workforce
Cons:
- Higher wages = higher payroll = higher premiums
- Certain union trades carry higher class codes
- Some carriers avoid union-heavy risks entirely
Non-Union Contractors:
Pros:
- Lower average payroll in some trades
- More flexibility
Cons:
- Higher injury frequency
- Less formal safety oversight
- Greater chance of misclassification
- More scrutiny during audits
Insurance companies evaluate not only what trade you perform, but how your workforce is structured. A union ironworker crew in NYC will be priced very differently than a small non-union residential remodeling contractor in Connecticut.
4. Payroll Classification Mistakes Inflate Premiums
One of the most common—and expensive—problems contractors face is payroll misclassification.
Examples include:
- Office staff incorrectly classified as construction labor
- Supervisors lumped into high-risk class codes
- Drivers misclassified as installers
- Clerical employees excluded from proper clerical codes
- Subcontractors without insurance counted as employees
At audit time, carriers often:
- Reclassify payroll into higher-rated categories
- Add uninsured subcontractor payroll
- Apply penalties for inaccurate reporting
These changes can result in:
- Thousands or even hundreds of thousands in additional premium
- Policy cancellations
- Difficulty obtaining coverage in the future
- Surprise bills months after the policy period ends
Many contractors don’t realize that a simple paperwork error can cost more than an actual claim.
What You Can Do to Reduce Workers’ Comp Costs Legally
The good news? High rates don’t mean you’re powerless. There are real, legal strategies that can lower your costs.
1. Get Your Classifications Reviewed
Have a specialist review:
- Job descriptions
- Payroll breakdowns
- Subcontractor relationships
- Supervisory roles
Small corrections can result in significant savings.
2. Control Claims Through Safety Programs
Carriers reward contractors who:
- Implement written safety programs
- Conduct toolbox talks
- Enforce PPE usage
- Track incidents
- Return injured workers to modified duty
Fewer claims = lower experience modification factor = lower premiums.
3. Use Proper Subcontractor Documentation
Always collect:
- Workers’ comp certificates
- Hold harmless agreements
- Written contracts
Without these, their payroll becomes your payroll in the eyes of your insurance company.
4. Work With a Specialist, Not a Generalist
Construction workers’ compensation is not a standard business policy. It requires:
- Market access
- Knowledge of labor law
- Understanding of audits
- Experience with difficult risks
A broker who specializes in construction can often access programs unavailable to general agencies.
5. Consider Specialized Programs
Certain carriers offer:
- Long-term pricing stability
- Audit-friendly structures
- Multi-state coverage
- Preferred contractor programs
These programs can dramatically reduce both cost and administrative headaches.
Why BGES Group Can Help
BGES Group is one of New York, New Jersey, and Connecticut’s Construction Insurance Specialists representing 50+ companies, including all the BEST general & umbrella liability programs. We offer all the coverage needed, including property, builders’ risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability, and group health.
Our commitment to you goes beyond the policies we provide. We are always just a call, text, or email away, ready to assist you, even on weekends. We understand the importance of your business and are here to help you navigate any insurance challenges.
BGES Group are Workers’ Compensation Insurance Specialists for Tri-State Business Owners: Unhappy with your rates, company, being canceled, losses causing difficulty getting coverage, in the middle of an audit dispute, misclassified payrolls, or whatever your issue. We can help!
We have special programs for Auto Services, Contractors (especially in New York), Limousine Services, Logistics Companies, Manufacturers, Recyclers, and Truckers; we can help ANY tri-state business owner. We are considered “Preferred Agents” for this one program that, if we can get you into, their pricing is excellent, offers long-term coverage stability, and can cover multi-state operations. The program takes the hassle out of doing annual audits, too.
If you want to speak with us, call Gary Wallach at 914-806-5853, click here to email, or visit our website.
Company: BGES Group 216A Larchmont Acres West, Larchmont, NY 10538 Email: bgesgroup@gmail.com Website: http://www.bgesgroup.com
Final Thought
Tri-State contractors pay more for workers’ compensation because they work in one of the toughest legal and regulatory environments in the country. But higher costs don’t have to be permanent. With the right guidance, proper classifications, strong safety practices, and access to specialized programs, contractors can protect their workers and their bottom line at the same time.
Smart insurance isn’t just a cost—it’s a competitive advantage.