How to Calculate Workman's Comp INS

Calculate your company's workers' compensation costs by first gathering some key information.

If you are buying workers' compensation insurance for the first time, you may wonder where to start to even get a quote. When you call an insurance agent, he will probably ask you for your company's "class codes," but you may not know what codes apply to you if you've never bought this type of policy before. Never fear. Following a few easy steps can get you all the information you need to obtain accurate workers' compensation quotes. Once you have the quotes, you can make an informed insurance decision.

Things You'll Need

• Computer with Internet access
• One year's estimated payroll

Instructions

1. Determine your employees' classification codes. If you live in California, visit the Workers' Compensation Insurance Rating Bureau web site to see the list of class codes for each type of employee. If you live in a state that uses the National Council on Compensation Insurance class codes, you can view them on the Workers' Compensation Shop website. If you are unsure what class code system your state uses, contact your state's Department of Insurance to locate the correct database.

2. Choose the appropriate class code for your employees from the code database. The database is organized by job description. If you have more than one type of employee, you may need multiple class codes.

3. Determine an estimated annual payroll amount for each classification of employee. For example, you may pay $65,000 per year for clerical staff and $100,000 for sales personnel.

4. Contact insurance agents or brokers that represent companies with which you are interested in doing business. Provide them the class code and payroll information. They will prepare premium quotations for you based on this information.

5. Compare the quotes when you receive them and choose the right company for your business.

Tips & Warnings

• You may ask the agents what premium is charged for each class code if you desire to estimate the policy premium yourself. Workers' compensation costs are determined by a stated dollar amount of premium per $100 of payroll. Clerical staff, for example, may be charged $1.08 in premium for every $100 of payroll. Using the above example of $65,000 annual clerical payroll, the premium would be 650 X $1.08 = $702 for the year.

• Agents and brokers can apply discounts or surcharges to your policy premium based on a number of factors. You are able to estimate policy premium yourself, but only a licensed agent or broker can give you an accurate premium quotation.

References

• Workers' Compensation Insurance Rating Bureau: Classification Information
• Workers Compensation Shop: Workers Compensation Classification Codes & Descriptions (Alphabetical)
• Insure.com: Controlling Your Workers Comp Premium