How Is The Workman’s Compensation Premium Determined?

I called up my business insurance broker and asked: What determine your Workman’s Compensation (WC) rate? Is it only your state rate or if you have injuries on the job does it go up?

1. The Workers Compensation rates differ from State to State . If you think of workers compensation as a major medical policy the better the benefits the higher the premium . So States determine the coverage’s under their State workers compensation benefits act . The companies calculate the rates on the coverage’s afforded under each State’s workers’ compensation benefits based on the classification of your particular business/occupation /duties .
2. In addition all the companies have their own rates so this is where you get one premium quotation better than another companies .
3. How they classify you business ( under what code ) makes a difference .  We use the 8831 kennel code for pet sitters and other companies use a different code . Sometimes the rates differ by $ 5.00 or more . ( kennel code being the lowest of the two ) .
4. Injuries /claims.  Any premium below $ 5000.00 will have a merit mod attached . The merit mods are as follows :
5. Lost time claim    1.00 merit mod
6. No loss time claims   .95 merit mod
7. Two or more loss time claims   1.05 merit mod

You take the merit mob times the base rate to determine the actual rate per $ 100.00 of payroll.

If your premium is over $ 5000.00 then you get into the experience rating and that is done through a rating service that most companies use . This would be too complicated to explain here in an email .  But over $ 5,000.00 in premium and a bad loss experience your mod could go to a 1.50 or 2.00 and basically you would be paying 1.5 to 2X the standard rate . Most pet sitter’s premiums are under the $ 5000.00 annual premium .