The premium for workers' compensation insurance is largely determined by:
- Rates developed for various occupational classes, and
- The policyholder's total annual remuneration* to those groups.
Rates are expressed as a cost per $100 of compensation and generally reflect the relative riskiness of the occupation. For example, the workers' compensation rate for a clerical or office employee might be 50 cents per $100 paid, while the rate for a sexton or landscaper could be as much as $6 per $100 paid.
Projecting total remuneration
The premium is based on the total remuneration you project for the period the policy will be in force. Determining that figure involves judgment in:
- Developing reliable estimates of how much you will compensate employees for the policy period.
- Declaring remunerations for all individuals you intend to treat as employees eligible for Workers' Compensation.
- Allocating projected remunerations across the correct classifications.
Workers' Compensation premiums are auditable. (The insurer may adjust them at the end of a year to conform to the considerations listed above, among others).
*Note that remuneration is broader than payroll and should include the value of housing and car allowances, employer-paid utilities, and Social Security offsets payable to clergy and other personnel considered by the Internal Revenue Service to be self-employed.
How claims experience affects premiums
Property/Casualty Insurance Disclaimer
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