Washington Business Insurance Guide: L&I, PFML, and Tech Hub Requirements

Washington State combines a thriving tech economy with one of the most comprehensive employee protection frameworks in the nation. From the monopolistic workers’ compensation system to mandatory paid family leave, businesses in the Evergreen State face unique insurance and compliance requirements. Understanding these systems is essential for success in Seattle’s tech corridor, the agricultural valleys, and everywhere in between.

Washington Insurance Requirements at a Glance

Washington’s Monopolistic Workers’ Compensation System

Understanding L&I

Washington is one of only four states with a monopolistic (state-run) workers’ compensation system:

Key Features:

• Department of Labor & Industries (L&I) administers all coverage
• No private workers’ comp insurance available
• All employers must register and pay into the state fund
• Self-insurance available only for large, qualified employers

How L&I Coverage Works

Rate Determination

L&I rates are determined by:

1. Risk classification - Based on business type and activities
2. Experience factor - Your claims history vs. industry average
3. Base rates - Set annually by L&I

Experience Factor:

• Factor of 1.0 = average for your classification
• Below 1.0 = better than average = lower premiums
• Above 1.0 = worse than average = higher premiums

Cost Ranges by Industry

Self-Insurance Option

Large Washington employers may qualify for self-insurance:

Requirements:

• Demonstrated financial stability
• Adequate claims handling capabilities
• L&I approval required
• Security deposit/bond required
• Annual reporting obligations

Benefits:

• Greater control over claims management
• Potential cost savings for low-risk employers
• Direct relationship with injured workers

Paid Family and Medical Leave (PFML)

Program Overview

Washington’s PFML program provides paid leave for:

• Birth or adoption of a child
• Serious health condition (employee’s own)
• Care for family member with serious condition
• Military family leave

Contribution Requirements (2024-2025)

Small Employer Exception: Employers with fewer than 50 employees are not required to pay the employer portion but must still collect and remit employee portions.

Benefit Amounts

• Up to 90% of average weekly wage
• Maximum weekly benefit: ~$1,450 (adjusted annually)
• Up to 12 weeks for most leaves
• Up to 16-18 weeks for combined circumstances

Employer Responsibilities

1. Register with Employment Security Department
2. Report quarterly wages
3. Collect employee premium portions
4. Remit premiums quarterly
5. Provide required notices to employees
6. Maintain job protection during leave

WA Cares Fund (Long-Term Care)

Program Basics

Washington’s first-in-nation long-term care program:

• Provides up to $36,500 lifetime benefit for long-term care
• Funded by employee payroll contributions
• 0.58% of wages (employee-paid only)
• Employers must collect and remit

Exemptions

Employees may be exempt if they:

• Had qualifying private long-term care insurance before 11/1/2021
• Work in Washington but live in another state
• Are temporary workers on non-immigrant visas
• Are self-employed (optional participation)

Tech Industry Insurance Considerations

Seattle’s Tech Ecosystem

Washington’s tech sector faces unique insurance challenges:

Key Coverages for Tech Companies:

Intellectual Property Considerations

Tech companies should evaluate:

• IP infringement coverage
• Patent defense insurance
• Trade secret protection
• Contractual liability coverage

Earthquake Insurance

Pacific Northwest Risk

Washington faces significant earthquake exposure:

• Cascadia Subduction Zone threat
• Seattle Fault beneath downtown
• Liquefaction risk in certain areas
• Building code variations by age

Coverage Considerations

Standard Commercial Property:

• Earthquake typically excluded
• Must be purchased as separate coverage or endorsement
• Deductibles often 5-15% of building value

Business Interruption:

• Ensure earthquake-triggered BI is covered
• Consider extended period coverage
• Contingent business interruption for supply chain

Maritime and Port Industries

Unique Washington Exposures

The Port of Seattle and maritime economy create specialized needs:

Longshore Coverage:

• Federal Longshore and Harbor Workers’ Act applies
• Separate from state workers’ comp
• Specialized maritime insurers required

Marine Business Insurance:

• Hull coverage for vessels
• Protection & Indemnity (P&I)
• Marine general liability
• Cargo coverage

Agricultural Insurance

Eastern Washington Agriculture

The state’s agricultural region has specific needs:

Key Coverages:

• Farm workers’ comp (through L&I)
• Crop insurance
• Equipment/machinery coverage
• Agribusiness liability
• Product liability for food products

H-2A Worker Considerations

Employers using H-2A seasonal workers must:

• Provide workers’ comp coverage through L&I
• Meet housing requirements
• Maintain specific insurance for worker transportation

Cost Management Strategies

L&I Premium Reduction

1. Improve your experience factor - Implement safety programs
2. Return-to-work programs - Use Stay at Work program benefits
3. Claim management - Work closely with L&I on open claims
4. Classification review - Ensure correct risk classification
5. Retrospective rating - Available for larger employers

General Cost Control

• Bundle commercial policies - Package discounts available
• Higher deductibles - Trade premium for retention
• Risk management - Documented safety programs reduce rates
• Shop regularly - Washington has competitive private insurance markets for non-WC coverage

Regulatory Resources

Key Washington Agencies

• Department of Labor & Industries: lni.wa.gov
• Employment Security Department: esd.wa.gov
• Office of the Insurance Commissioner: insurance.wa.gov
• WA Cares Fund: wacaresfund.wa.gov

L&I Account Management

Employers can manage their L&I account online:

• File quarterly reports
• Make premium payments
• View experience factor
• Report claims
• Access safety resources

Regional Considerations

Seattle Metro (King, Pierce, Snohomish Counties)

• Highest labor costs in state
• Competitive insurance market
• Tech industry concentration
• Earthquake exposure considerations

Eastern Washington

• Agricultural focus
• Lower cost of living/operating
• Seasonal business variations
• Wildfire exposure in some areas

Tri-Cities, Spokane

• Growing tech presence
• Manufacturing base
• More affordable than Seattle
• Federal contractor presence (Hanford)

Business Insurance Checklist for Washington

Mandatory Programs

• L&I workers’ compensation registration
• Paid Family & Medical Leave enrollment
• WA Cares Fund compliance
• Unemployment insurance registration

Required for Operations

• Commercial auto liability (if operating vehicles)
• Professional licensing insurance (where required)

Strongly Recommended

• General liability ($1M minimum)
• Commercial property
• Business interruption
• Earthquake coverage (especially Puget Sound)
• Cyber liability

Industry-Specific

• Tech E&O (technology companies)
• Professional liability (service businesses)
• Maritime coverage (port-related)
• Product liability (manufacturers)

Key Takeaways

1. L&I is mandatory and exclusive - No private workers’ comp alternative exists
2. Multiple payroll programs - Budget for L&I, PFML, WA Cares, and unemployment
3. Experience factor is critical - Safety programs directly reduce L&I costs
4. Tech businesses need specialized coverage - E&O, cyber, and D&O are essential
5. Earthquake exposure is real - Don’t ignore this significant risk

This guide provides general information about Washington business insurance requirements. Consult with a licensed Washington insurance professional for advice specific to your business situation.