The cost of workers’ compensation insurance varies from state to state. It’s based on three factors:

• Total Wages Paid at rate set by the job classifications.

• Job classification. Insurers classify jobs in your company by responsibility and associated risk. Higher-risk positions—for example, construction workers—are classified at a higher risk of injury than a clerical employee. Insurance rates differ according to risk. The National Council on Compensation Insurance (NCCI), an independent body that regulates and oversees workers’ compensation issues, has developed more than 700 classification codes (or “class codes”) that categorize people’s jobs.

• Experience Modification Rate (EMR). An EMR is a calculation that is determined by your industry classification and your company’s past workers’ comp claims. The rate is used to determine your monthly workers’ compensation premium. If your business has a low level of claims, it’s considered a lower risk business and your workers’ comp policy costs less. A higher number of claims requires a more expensive policy to cover employees in high-risk jobs. An ideal mod rate for a business would be 0.95 or lower—meaning you have little to no significant workers’ comp claims. Rates starting around 1.05 or higher suggest a high-risk employer with several serious recent claims.

Affiliation with a SIG Non-Profit, such as Cove Risk in Massachusetts, can help you avoid an  additional charge such as an Expense Constant, which is charged by carriers at a rate established by the state insurance commissioner to set up an account. Additionally, the DIA charges a few on every Worker Comp policy called the DIA Assessment. In Massachusetts, Cove Risk’s assessment is 1/5 of the standard rate.

You can check your company’s mod rate on the declaration page (Dec Page) of your insurance policy or go to Experience Rating Search at wcribma.org.

Why does an employer need to post a Workers’ Comp Affidavit and Labor Law poster? Click here to find out.