The cost of workers’ compensation insurance depends on the nature of your business and your claim history.
A basic idea of the workers’ compensation insurance market is that a group of businesses are sharing the risk of experiencing a loss. Your “group” is made up of other businesses in your same industry classification.
Each industry classification, or class code, has a different insurance rate based on its employees’ exposure to risks in the workplace. The rate is applied to every $100 of payroll. Rates are set by state bureaus, or filed by insurance companies based on previous experience.
Generally, the more hazardous the operation, the more losses can be expected, leading to higher-than-average rates. In the example below, you can see the difference that the class code rate makes on two companies’ starting premiums.
This is called the “starting premium” because there are many other factors that can increase or decrease this amount. If your businesses qualifies (based on minimum premiums paid in the past), your account will be subject to experience rating, which calculates a credit (or debit) factor based on your experience (claim history), compared to other members of your industry classification in your state. Learn more!
Businesses may have additional pricing factors applied by participating in sponsored trade programs and safety groups. It is also possible to save money by participating in state premium credit programs, such as:
- Safety Program Credits
- Drug and Alcohol Free Workplace Credits
- Return-to-Work Programs
- Deductible Credits
There are many components of pricing that may apply on a risk-by-risk basis. Different states have different regulations, and different carriers have filed differing factors.