If you run a physical therapy practice, workers' compensation insurance probably isn't the most exciting part of your business plan. But here's the reality: it's legally required in almost every state if you have employees, and getting it right can save you thousands of dollars. The good news? Physical therapy businesses enjoy some of the lowest workers' comp rates in the country because you operate in a controlled, low-risk environment. Let's break down what you need to know.
Do Physical Therapists Need Workers' Comp Insurance?
In most states, the answer is yes—if you have employees. Workers' compensation is mandatory in nearly every state once you hire your first employee, whether that's another physical therapist, a receptionist, or a billing specialist. Even if you're a solo practitioner right now, the moment you bring someone onto your payroll, you'll likely need coverage.
There are a few exceptions. Texas is the only state where workers' comp is truly optional for private employers, though most businesses still carry it to protect themselves from employee lawsuits. A handful of states have different thresholds—some don't require coverage until you have three or five employees. But don't assume you're exempt. Check your state's specific requirements, because penalties for operating without required coverage can be severe: hefty fines, stop-work orders, and even criminal charges in some states.
What about independent contractors? If you work with contract therapists, they're typically responsible for their own coverage. Just make sure you classify them correctly—misclassifying employees as contractors is a common mistake that can land you in hot water during an audit.
Understanding Class Codes and How They Affect Your Rate
Workers' comp premiums are calculated based on class codes—standardized categories that reflect the risk level of different types of work. For physical therapy practices, you'll typically be assigned NCCI Class Code 8832, which covers physical therapists working in offices, clinics, or medical facilities. This code recognizes that your work environment is relatively safe compared to, say, construction or manufacturing.
As of 2025, the national average rate for therapists under Class Code 8832 is about $0.27 per $100 of payroll. That's incredibly low. To put it in perspective, a practice with total annual payroll of $106,000 might pay just $286 per year for workers' comp coverage. Of course, your actual rate depends on your state, claims history, and other factors—but physical therapy consistently ranks among the lowest-risk professions.
Here's where it gets a bit tricky: if you provide home health services—visiting patients in their homes rather than treating them in a clinic—you might fall under Class Code 8835 instead. This code covers home health care providers and typically carries a slightly higher rate because of the added risks of traveling and working in uncontrolled environments.
One important note: in a physical therapy office, you can't separate out administrative staff like receptionists into a different, cheaper class code. Everyone in your practice gets classified under the same code. This is different from some industries where clerical workers can be carved out separately.
What Your Experience Mod Means for Your Premium
Once your business has been around for a few years and you have enough payroll history, you'll be assigned an experience modification rate, or EMR (sometimes called an e-mod or x-mod). Think of this as your safety report card. An EMR of 1.0 is average. Below 1.0 means you're safer than average and you'll get a discount on your premium. Above 1.0 means you've had more claims than expected, and you'll pay a surcharge.
For example, if your base premium is $500 and your EMR is 0.85, you'll only pay $425. But if your EMR is 1.20, you'll pay $600. The difference adds up quickly, especially as your practice grows. Your EMR is calculated based on your claims history over the past three years, and it gives more weight to the frequency of claims than their severity. In other words, having several small claims can hurt you more than one large claim.
This is why workplace safety matters, even in a low-risk field like physical therapy. Implement proper lifting techniques when assisting patients, invest in ergonomic equipment for your staff, and maintain clean, hazard-free facilities. A strong safety culture and a good return-to-work program can keep your EMR low and your premiums affordable.
Common Workers' Comp Claims in Physical Therapy Practices
You might think physical therapy is too safe for serious workplace injuries, but claims do happen. The most common issues include repetitive motion injuries—things like carpal tunnel syndrome or tendonitis from performing manual therapy techniques day after day. Back strains are another frequent claim, especially when therapists help transfer or support patients during exercises.
Slips, trips, and falls can also occur, whether from wet floors after a patient uses a treatment table or clutter in a busy clinic. Even minor injuries like needlestick accidents (if you use dry needling) or burns from heat therapy equipment can trigger a claim. The key is to take these risks seriously and create protocols to minimize them.
How to Get Started and Keep Costs Down
Getting workers' comp coverage for your physical therapy practice is straightforward. Start by contacting an insurance agent or broker who understands your industry. They'll ask about your payroll, the number of employees, and the type of work you do. Based on that, they'll get you quotes from different carriers.
Be aware that most insurers have minimum premium requirements—often $250 to $500 per year—even if your calculated premium based on payroll is lower. For very small practices, this can feel like you're overpaying, but it's standard industry practice.
To keep your costs down over time, focus on safety and claims management. Train your staff on proper body mechanics, create a culture where employees report hazards immediately, and have a clear return-to-work policy for injured employees. When injuries do happen, getting employees back to light-duty work quickly can reduce claim costs and keep your EMR favorable. Some practices even work with occupational health specialists to design pre-employment physical tests, ensuring new hires are physically capable of the job—this can prevent injuries before they happen.
Workers' compensation insurance is a necessary part of running a physical therapy practice, but it doesn't have to be a financial burden. With low industry rates, a focus on safety, and smart claims management, you can protect your employees and your business without breaking the bank. If you're ready to get covered, reach out to an insurance professional who can walk you through your options and find the right policy for your practice.
