For business owners who have employees working for them, a workers compensation insurance is required by the law before they can operate. If you talk about workers compensation insurance premiums, the pricing is not the same across businesses. The use of workers comp codes is helpful in figuring out what pricing of workers compensation insurance premiums must be followed. For most states, they use a code system that is created by the NCCI or National Council on Compensation Insurance. The exposure and risks of business are classified using this coding system. This thus helps companies better gauge how much they should be paying their worker’s compensation insurance premiums. However, there are some states that do not utilize this classification code with the likes of Delaware, California, New Jersey, New York, and Pennsylvania. Though Texas has used this system, they have deviations to the classification codes.
The NCCI is an independent organization that runs for profit. The statistical data from the NCCI is what insurance companies use for them to determine how much companies must pay for their worker’s compensation insurance premiums. Figuring out workers comp codes is not as easy as it seems. It does not matter who is assigned to do the classification because there are still some businesses that make classification mistakes. When the classification is not done properly, the workers compensation insurance premium could be too high or too low. If these mistakes are made, a large bill may be paid by the business during the worker’s compensation audit once the policy expires.
Using the NCCI information is not for free and not just obtained anywhere on the net. Because the organization is run for profit, they sell a manual with their proprietary information.
When it comes to workers comp codes, they look at your business on a general perspective. Simply put, they will not be minding the individual jobs that form part of your business. When you have a pharmaceutical business, for example, and have a few clerical workers, your business is still classified under the code for pharmaceutical exposure and not the code for clerical exposure. The same cannot be said when the scenario involves dealing with a construction business. For construction businesses, though, you can have as many code classifications as necessary for an individual employee. For each workers compensation code class, you can qualify by providing the hours for each.
As mentioned, finding out the proper worker’s compensation code to use is a challenging one. There are consultants that can help your business review the codes and modify them accordingly. Only with the right workers comp codes can you rest assured that unexpected bills will be avoided after a workers comp audit leading you to save thousands of your money.