Workers’ comp classification codes are four-digit codes that help to identify different types of work. Insurance companies use these codes to classify the amount of risk a particular business may face based on the type of work performed. When insurance agents look up a classification codes it allows them to see risks associated with certain types of work.When a classification code is assigned to an employer, that employer can then be given an accurate workers’ compensation insurance rate. Insurance companies can use this information to come up with the cost of the premium for a workers’ compensation insurance plan.

Why are workers’ compensation classification codes important?

Workers’ compensation codes help insurance companies to see what kind of risks a certain business may face. It gives insurance companies the information they need to determine an accurate rate for the insurance premium a business has to pay. This is also good news for businesses because they will get an insurance rate that is spot on. Businesses do not want to receive an insurance rate that is too high for the type of work they perform.

How can I find the WC classification code for my state?

You can find the workers’ compensation classification code for your state by visiting the National Council on Compensation Insurance or NCCI. However, only certain states participate under the NCCI. Other states have set up their own classification code for workers’ compensation. People who live in these states should search for a state-run organization that guides businesses on their classification codes.

How are workers’ compensation rates calculated?

Workers’ compensation rates are determined by various factors including:

Classification Code

The classification code is based on the type of work that a business performs. It is determined by the level of risk. Insurance companies will look at your business’s classification code to help determine the rate.

Payroll

Another determining factor is the number of employees a business has and a business’s yearly payroll. When you reach out to an insurance company about workers’ compensation insurance you may be asked about your annual payroll. That number contributes to how insurance agents calculate your workers’ compensation premium. Experts say that not giving an accurate answer for payroll can impact your business during an annual premium audit.

Experience Modification Factor

Lastly, insurance companies will likely look at the number and type of claims filed by your company in the past. This is called your business’s experience modification factor. If your experience modification factor depicts your losses are better than average, your business could be eligible for a discount or lowered premium. If your losses are greater than average you may be forced to pay a higher premium.

Workers’ comp classification codes are four-digit codes that help to identify different types of work. Insurance companies use these codes to classify the amount of risk a particular business may face based on the type of work performed. When insurance agents look up a classification codes it allows them to see risks associated with certain types of work.When a classification code is assigned to an employer, that employer can then be given an accurate workers’ compensation insurance rate. Insurance companies can use this information to come up with the cost of the premium for a workers’ compensation insurance plan.

Workers’ compensation codes help insurance companies to see what kind of risks a certain business may face. It gives insurance companies the information they need to determine an accurate rate for the insurance premium a business has to pay. This is also good news for businesses because they will get an insurance rate that is spot on. Businesses do not want to receive an insurance rate that is too high for the type of work they perform.

You can find the workers’ compensation classification code for your state by visiting the National Council on Compensation Insurance or NCCI. However, only certain states participate under the NCCI. Other states have set up their own classification code for workers’ compensation. People who live in these states should search for a state-run organization that guides businesses on their classification codes.

Workers’ compensation rates are determined by various factors including:

Classification Code

The classification code is based on the type of work that a business performs. It is determined by the level of risk. Insurance companies will look at your business’s classification code to help determine the rate.

Payroll

Another determining factor is the number of employees a business has and a business’s yearly payroll. When you reach out to an insurance company about workers’ compensation insurance you may be asked about your annual payroll. That number contributes to how insurance agents calculate your workers’ compensation premium. Experts say that not giving an accurate answer for payroll can impact your business during an annual premium audit.

Experience Modification Factor

Lastly, insurance companies will likely look at the number and type of claims filed by your company in the past. This is called your business’s experience modification factor. If your experience modification factor depicts your losses are better than average, your business could be eligible for a discount or lowered premium. If your losses are greater than average you may be forced to pay a higher premium.