04 May Understanding Your Workers Comp Rates
Understanding Your Workers Comp Rates
If you have employees, you are required to cover them with a Workers Comp policy. Workers Comp is a type of Insurance designed to cover your employees if they get injured or sick while on the job. While most Workers Comp policies work in a similar way, there are still several things to know when reviewing your policy.
Understanding Your Workers Comp Rates – Class Codes
A Workers Comp Class Code is a 4 number code that classifies the type of work that is performed by your employee. These class codes are established by the WCIRB (Workers Comp Insurance Rating Bureau) of California. Making sure your employees are classified correctly is absolutely essential because the rates associated with different class codes will vary dramatically from one class code to another.
Understanding Your Workers Comp Rates – Rates
A class code’s rate represents the amount that the Workers Comp will cost for every $100 of payroll. Each Workers Comp Insurance carrier has their own rates associated with each class code. For example, with a clerical employee, you may receive a rate of about $1.00 per $100 of payroll, which you can also think of as costing 1% of payroll. You can multiply your estimated payroll by the class code’s rate to obtain a rough estimate of the premium. Lets say you had $100,000 of clerical payroll at a 1.00, or 1% rate. $100,000 x 1.00% would be cost an estimated $1,000 in premium. Please remember, this estimation would not include taxes, fees, debits, or credits that may be included with a quote.
Understanding Your Workers Comp Policy – Xmod
Your Workers Comp Experience Modification, also known as an Xmod, is a rate modifier that is applied towards your current Workers Comp rate. The Xmod, like the class codes, are calculated by the WCIRB. Your Xmod is a calculation of your loss history compared to the expected loss history for your class code(s). An Xmod of 100%, or 1.00, is considered average. Alternatively, if you have an Xmod of 70% (.70), you will only have to pay 70% of the premium you would if your Xmod was 100% (1.00). Not all business are eligible for an Xmod; you must have over $10,000 in pure premium (premium before taxes and fees) for at least 2 years before the WCIRB will provide you with an Xmod.
Would you like to learn more about your Workers Comp Rates? We are here to assist you! Give our Workers Comp specialists a ring at 925-297-4829.
All information is general in nature and is intended to provide guidance only. It is up to you to request specific coverage options, the agency and agent do not bear this responsibility. Always read the policy if there is a questions about coverage or a claim. If any information herein should conflict with your actual policy’s specific language, the policy language will be controlling.
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