How Are Workers Compensation Premiums Determined?

Workers compensation insurance premiums are typically calculated based on several factors, including the following:

1. Your company’s classification code: Every business is assigned  a classification code(s) that reflects the type of work it does. This code is assigned by the National Council on Compensation Insurance (NCCI) or a state rating bureau such as the WCIRB . The classification code is used to determine the level of risk associated with your business and the corresponding premium rate.
2. Your company’s payroll: Your workers compensation premium is typically calculated based on your company’s payroll, which includes wages, salaries, bonuses, and other forms of compensation paid to your employees. The higher your payroll, the higher your workers compensation premiums are likely to be.
3. Your company’s experience modification factor: The experience modification factor, or “mod,” is a factor that reflects your company’s safety record and claims history. A mod of 1.0 is considered average, while a mod above 1.0 indicates a higher risk and a mod below 1.0 indicates a lower risk. A lower mod can lead to lower premiums, while a higher mod can lead to higher premiums.
4. Your state’s workers compensation laws and regulations: Each state has its own laws and regulations governing workers compensation insurance, which can affect the premium rates for your business.
5. Other factors: Other factors that can affect your workers compensation premium include the number of employees you have, the nature of your business operations, and any additional coverage you may require, such as coverage for high-risk activities or hazardous materials.

Overall, the premium for workers compensation insurance is calculated by multiplying the rate for your classification code by your payroll, and then adjusting the premium based on your company’s experience modification factor and any other applicable factors. If you would like a quote comparison on Workers Compensation insurance call our office at 877-428-8778 for a free comparison of the leading insurance companies.