Workers’ Compensation Class Codes

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Workers’ Compensation Class Codes Workers’ comp class codes are numbers that insurers use to classify companies and employees by exposure to risks. Riskier jobs carry higher premiums. That’s why, workers’ class codes are an important part of the formula insurers use to estimate how much a company’s compensation insurance will cost. There are four factors that influence the cost of their workers’ comp coverage: Location, type of work, payroll, claims history. Generally, the more risk a worker faces, the higher the cost of workers’ compensation insurance in the industry. For example, construction workers likely have a higher level of risk than graphic designers. The workers’ compensation codes for both of these jobs would reflect the difference in risk. Workers’ compensation insurance providers use the codes to determine how risky your business is to insure and how much to charge you for your insurance. Each workers’ comp class code includes information on the losses accumulated by specific types of work. From there, insurance companies can determine workers’ compensation costs. Why are workers compensation class codes necessary? -Workers’ comp class codes are used to fairly distribute the costs of workers’ compensation insurance among employers -Companies with more workplace risks pay more for their coverage and those with fewer risks pay less. -Without such a system, all companies would pay the same premium, forcing the safer companies to subsidize the riskier ones. #benewinsurance #insurtech #inclusiveinsurance #insurance #reinsurance #takaful

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