A Guide to Workers Compensation Cost by Daigle & Travers
All businesses in Connecticut and New York that have employees are required to carry workers compensation insurance. Depending on your industry, workers comp may be your highest expense after payroll.
*Note that in New York, when you have payroll you are required to carry New York State Disability*
We are asked often, how is workers compensation calculated?
Workers Compensation Insurance is determined using three main factors:
- Employee classification code
- Experience modification rate
Classification codes (or class codes) are assigned to businesses based on industry type and employee duties.
The National Council on Compensation Insurance (NCCI) designates the class codes to occupations as well as the base rates. Jobs with more hazard exposure have higher rates, such as the construction trades vs. low-risk occupations such as lawyers and doctors.
In Connecticut, the base workers comp rates provided by the NCCI are one of the highest in the state, luckily businesses have the option to seek a competitive base rate with a private insurance company. Daigle & Travers Insurance represents over 30 insurance carriers and is able to shop the market for the most competitive rates for our clients.
An Experience Modification Rate (or MOD)
A MOD essentially becomes a debit or credit applied to premium based on your prior claims history.
A business begins with a modifier of 1:
If the business has not made any claims on its workers compensation, the MOD may decrease each year. We have seen Mods as low as .75.
If the business has a history of frequent claims, the modifier will increase. This increase is a debit put on your workers compensation premium. These debits can sometimes double your premium.
**Disclaimer, for a company to receive an experience mod, they usually need to generate a premium over $5,000 annually and it may take 2 or 3 years for an experience mod to be generated**
Managing your claims is one of the best ways for a business to manage workers comp costs. By investing some energy into promoting safety, you may be able to lower your costs down the line.
The size of your payroll will be the largest determinant of the cost of a business’s workers compensation. Employees payroll is assigned a classification code and the total annual payroll is divided by 100 and then multiplied by the workers compensation rate.
Let’s look at how this calculation might look for a law office:
|Class Code||×||Rate||×||Payroll||÷||100||=||Workers Comp Premium|
Workers Compensation Common Class Codes
Here are other common class codes and the rate provided by the NCCI and the New York State Fund versus rates we attained from the competitive market:
|Class Code||Description||NCCI Rate||A||B||C|
|0913||Domestic Help||1423 flat rate|
Daigle and Travers has three convenient locations in lower Fairfield County: Darien, Westport, and Wilton nestled between Stamford, Norwalk, and New Canaan. We also serve Greenwich, Weston, Westport, Wilton, Ridgefield, Redding, Easton, Fairfield, Southport, Trumbull and parts of Westchester County and Long Island. When partnering with us, we will give you all the necessary information and options you need to make the best choice of insurance company and policy for your workers compensation. Give us a call today at (203)-655-6974.
Serving the following zip codes within Fairfield County, Connecticut:
06830 • 06831 • 06836 • 06883 • 06880 • 06881 • 06888 • 06889 • 06897 • 06877 • 06879 • 06875 • 06876 • 06896 • 06612 • 06824 • 06825 • 06828 • 06890 • 06611