Glossary · PA Workers' Comp

Deposit Premium

The upfront payment required at workers' comp policy inception, typically 25–33% of estimated annual premium.

Definition

The deposit premium is the upfront payment required by a workers' comp insurer at the start of a policy year. It is based on the employer's estimated payroll and rates, and typically represents 25–33% of the estimated annual premium.

How Deposit Premiums Are Set and How Pay-As-You-Go Can Eliminate Them

The deposit serves as a good-faith payment while the insurer assesses the actual risk for the year. It is applied against the final premium at audit.

Deposit premiums can be a significant cash flow burden for businesses with large workers' comp programs. Pay-as-you-go billing eliminates or reduces the upfront deposit requirement.

For new businesses with no prior coverage history, carriers may require a larger deposit — sometimes 100% of estimated annual premium — due to the unknown risk profile.