Know Your Digits: Workers’ Comp Class Codes
Staffing Insurance: Workers’ Compensation Class Codes
An employer’s best self-defense against incurring a large additional premium during an audit is to obtain adequate guidance regarding how to properly classify exposures for workers’ compensation coverage. Assigning the correct code gives you a better indication of the type of job you’re assigning a temporary employee, the risks associated with it and the claims that could occur as a result.
Four Key Considerations:
- It’s all about your client. The class code is based on your client’s operations (their specific governing class code). Although it’s technically your employee, they’re working at your client’s facility; therefore, the class code will be determined based on your client’s operations, work environment, job description, etc.
- Rates will fluctuate. Workers’ Compensation rates vary from state to state. Although your employees might be performing the same exact job in multiple states, the rates will change based on the state that the employee is working in.
- Wrong classifications can lead to additional premium. Incorrect classifications can impact your year-end audit. When the auditor reviews your client list, employee job description and actual payrolls based on the estimates given at the beginning of the policy period, they’ll review and confirm that the class codes listed on the policy are accurate. If you don’t have the correct classifications listed, the auditor will re-classify the placement which can result in additional premium.
- Check with your carrier. It’s important to check with your insurance carrier before adding a new class code. Generally speaking, insurance carriers have lists of class codes they consider eligible or ineligible based on the exposure the job presents. It’s important to confirm the carrier is comfortable with that classification before the placement is made. This helps avoid a claim being denied or a carrier offering a non-renewal.
Bottom line is that if you’re using the wrong class code, you’re not paying the proper premium or getting an accurate depiction of losses and have less of a chance of properly managing your risk.
- Register for Back to Basics: Workers’ Compensation Seminar (7/30)
- Register for Deep Dive: Workers’ Compensation Seminar (8/6)
- Register for Bottom Line Impact: Workers’ Compensation Seminar (9/16)
- Back to Basics: Class Codes
- Top 7 Most Commonly Confused Codes
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