Workers Compensation Class Codes
Workers’ compensation classification codes accurately identify various workplace exposures.
What are workers comp class codes?
Workers comp class codes are a compilation of job definitions. The codes are designed to accurately identify various workplace exposures. Each specific job classification is assigned a 4-digit number, and each workers’ compensation code has its own rate for the purpose of calculating premiums on a policy. The resulting pure premium rate for the classification reflects the average anticipated cost of benefits per every $100 of payroll incurred by businesses within the particular industry.
Why are workers compensation class codes important to a small business?
These codes allow insurance companies to measure risk among their customers and price workers’ compensation insurance policies accordingly.
- These rates are lower for office employees because their work-related injuries are less frequent and less severe.
- Workers’ comp rates are higher for companies that have a greater chance of physical injury, such as those in construction, transportation, and manufacturing.
Class codes are the most significant factor in determining an employer’s workers’ comp insurance rates.
What is the history of workers comp class codes?
The National Council on Compensation Insurance (NCCI), an advisory organization supported and funded by insurance providers, created these codes. The NCCI and insurance companies continue to establish and maintain workers’ compensation classification codes for hundreds of thousands of employers across the United States. Some states have rating bureaus that oversee their own sets of workers’ comp codes.
Summary
Workers comp class codes are a compilation of job definitions. The codes are designed to accurately identify various workplace exposures via an assigned 4-digit number.
