How many people does your business employ?
Posted: Mon Dec 23, 2024 10:40 am
Not having workers' comp insurance can pose a massive risk to you, your employees and your business. Penalties vary by state, but Lovejoy said that in states where the NCCI regulates workers' comp, it retains the power to assess and fine past premiums for workers' comp coverage that should have been in place, in addition to fines placed by the state government.
Though it's not a direct component of the equation that insurers use to determine new zealand phone numbers premiums, a business's size correlates with its risk. More employees means more people who could theoretically injure themselves on the job and file a workers' comp claim. This higher theoretical number of claims may compel insurers to increase your premiums.
How are workers' compensation premiums calculated?
Insurers determine the appropriate workers' compensation premiums to charge a business by assessing three key factors: payroll, classification rate and EMR.
Payroll: Workers' comp insurers calculate premiums per $100 of your business's payroll. The cost of your workers' comp insurance costs for every $100 of payroll varies by state, based on guidance from the NCCI. That said, a high-risk business in a low-premium state may ultimately pay more than a low-risk one in a high-premium state. Your risk is the product of the next two factors.
Classification rate: This is the formal term for the type of work your team performs, which helps insurers determine your risk. Companies whose employees mostly perform desk jobs are considered low risks, but businesses that specialize in dangerous manual labor, such as construction companies, are at a higher risk. The NCCI keeps a running list of classification rates and risk levels that insurers use in their calculations of workers' compensation insurance costs.
EMR: Your experience modification rate is a formal representation of your company's workers' comp claims history. The more extensive your claims history, the more risk insurers will ascribe to you, thus raising your premiums.
Insurers combine these three factors into this workers' compensation insurance cost formula:
Classification Rate x EMR x (Payroll ÷ 100) = Premium
Bottom line: Your payroll, classification rate and claims history (EMR) all play a role in the cost of your workers' compensation insurance.
How to save on workers' compensation insurance costs
It's understandable if you find these workers' comp premium criteria worrisome – after all, you can't quite control the risk level of the type of work your company performs. You might also feel that being penalized for previous claims adds insult to injury, though this model is the foundation of all types of insurance. All this said, there are some ways to lower your workers' comp premium costs.
Though it's not a direct component of the equation that insurers use to determine new zealand phone numbers premiums, a business's size correlates with its risk. More employees means more people who could theoretically injure themselves on the job and file a workers' comp claim. This higher theoretical number of claims may compel insurers to increase your premiums.
How are workers' compensation premiums calculated?
Insurers determine the appropriate workers' compensation premiums to charge a business by assessing three key factors: payroll, classification rate and EMR.
Payroll: Workers' comp insurers calculate premiums per $100 of your business's payroll. The cost of your workers' comp insurance costs for every $100 of payroll varies by state, based on guidance from the NCCI. That said, a high-risk business in a low-premium state may ultimately pay more than a low-risk one in a high-premium state. Your risk is the product of the next two factors.
Classification rate: This is the formal term for the type of work your team performs, which helps insurers determine your risk. Companies whose employees mostly perform desk jobs are considered low risks, but businesses that specialize in dangerous manual labor, such as construction companies, are at a higher risk. The NCCI keeps a running list of classification rates and risk levels that insurers use in their calculations of workers' compensation insurance costs.
EMR: Your experience modification rate is a formal representation of your company's workers' comp claims history. The more extensive your claims history, the more risk insurers will ascribe to you, thus raising your premiums.
Insurers combine these three factors into this workers' compensation insurance cost formula:
Classification Rate x EMR x (Payroll ÷ 100) = Premium
Bottom line: Your payroll, classification rate and claims history (EMR) all play a role in the cost of your workers' compensation insurance.
How to save on workers' compensation insurance costs
It's understandable if you find these workers' comp premium criteria worrisome – after all, you can't quite control the risk level of the type of work your company performs. You might also feel that being penalized for previous claims adds insult to injury, though this model is the foundation of all types of insurance. All this said, there are some ways to lower your workers' comp premium costs.