Workers compensation insurance: state-by-state basics

What workers compensation insurance is and who needs it

Workers compensation insurance pays for wages, medical treatment and rehabilitation when a worker is injured or becomes ill because of work. Safe Work Australia states that employers must have insurance to cover their workers. Australia has 11 main schemes, one for each state and territory and three Commonwealth schemes. An employer needs cover in each state where it has workers.

The rules differ. Examples checked with regulators:

  • NSW: most employers need a policy. An employer is exempt only if it pays $7,500 or less in wages in a financial year, has no apprentice or trainee, and is not part of a group of businesses.
  • Victoria: an employer must register for WorkCover insurance if it employs workers in Victoria and pays, or expects to pay, more than $7,500 a year in remuneration, or if it has any apprentices or trainees.
  • Queensland: an employer must hold an accident insurance policy with WorkCover Queensland unless it is an approved self-insurer.
  • Western Australia, Tasmania, the Northern Territory and the ACT: the schemes are privately underwritten. Employers buy a policy from an insurer approved or licensed under the scheme.

Who counts as a worker also differs. Some contractors are treated as workers. Check with the scheme regulator in each state where you operate.

What is usually covered, and common exclusions

Benefits are set by legislation, not by the insurer. They generally include:

  • weekly payments while the worker cannot work
  • medical, hospital and rehabilitation costs
  • lump sums for permanent impairment or death
  • in some schemes, the employer's liability for damages claims.

What a policy does not do:

  • It does not usually cover the business owner. WorkSafe Victoria, for example, says a sole trader with no workers does not need to register. Owners who want cover for themselves look at personal accident or income protection insurance.
  • It does not pay fines for safety breaches.
  • It does not cover workers based in another state unless that state's rules are met.

How it is sold, and when a broker is the usual route

This is where workers compensation differs most from other insurance.

  • Government schemes: in NSW, Victoria and Queensland the policy comes from the state scheme: icare in NSW, WorkSafe Victoria and its agents, and WorkCover Queensland. Employers can apply directly.
  • Privately underwritten schemes: in Western Australia, Tasmania, the Northern Territory and the ACT, approved insurers compete for the business and set their own premiums. Brokers commonly arrange this cover.

A broker is the usual route when an employer has workers in several states, buys in a privately underwritten scheme, or wants help with wage declarations and claims. In the government schemes a broker cannot change who the insurer is, but can help with the paperwork. Check a broker on the ASIC professional registers.

What makes this cover hard or expensive

Cover cannot normally be refused, because it is compulsory. Cost is the issue. Premiums are generally driven by:

  • total wages
  • the industry classification of the business
  • the employer's claims record, for larger employers
  • whether wages were declared accurately and on time.

Common and costly mistakes are treating workers as contractors when the scheme counts them as workers, under-declaring wages, and missing a state where staff are based. Operating without a required policy can lead to penalties.

Questions to ask before buying

  • In which states or territories do I need a policy?
  • Do any of my contractors count as workers under each scheme?
  • Am I under an exemption threshold, and does hiring an apprentice change that?
  • Which industry classification applies to my business?
  • How and when do I declare wages?
  • Are working directors covered in this state?
  • What must I do when a worker is injured, and how quickly?
  • If a broker is involved, what do they charge?

Where to complain

Workers compensation does not follow the usual path of insurer first, then the Australian Financial Complaints Authority. AFCA's rules exclude it.

Start with the insurer or claims agent that manages the policy or claim, and use its complaints or review process. If that does not resolve the matter, go to the scheme regulator or dispute body in that state or territory. Safe Work Australia lists the authority for each jurisdiction. A complaint about a broker's service on other types of insurance can go to the broker and then to AFCA on 1800 931 678.

Find a licensed broker

Browse businesses licensed to arrange general insurance in your city, or search every state.

Sources

Last checked: 2026-10-06

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