What Is a Workers’ Comp Class Code?
Workers’ compensation class codes identify categories of work to help insurance companies better understand their customers. These codes allow companies to categorize areas of work based on an estimated amount of risk. This allows insurance companies to accurately determine workers’ compensation coverage costs.
Insurance agents or underwriters can simply look up the codes in the NCCI Scopes Manual. Each code in the manual is either three or four digits and will provide extensive underwriting information. Each class code will include information on the losses accumulated by specific types of work. From there, a cost can be determined by the insurance companies looking up the code.
Generally, the more risk a worker faces, the higher the cost of workers’ compensation insurance will be. For example, construction workers are likely to have higher risk than graphic designers. This is due to more dangerous conditions on the job. Various contractors will also have different codes and risk. For instance, an electrician may have a different code than a carpenter. Workers’ comp class codes are a starting point for insurance companies as they work to provide you with the best coverage possible.
Are Worker Compensation Class Codes the Same for All States?
Workers’ compensation class codes are not the same in every state. That said, most states use the National Council on Compensation Insurance (NCCI) class code system. This class code system helps bring consistency in workers’ compensation class codes across states. It helps insurance companies easily see the risk that certain occupations face.
In contrast, some states operate with independent or monopolistic class codes. This means a state’s insurance class code system can vary based on their individual rules and regulations. These independent or monopolistic states won’t follow the code system determined by the NCCI. Therefore, the cost of workers’ compensation coverage in these states can vary much more than states that do follow the NCCI. Some monopolistic state’s include:
- North Dakota
Some independent states include:
- New York
- North Carolina
- New Jersey
You’ll want to research your state’s code system specifically as you’re looking for coverage. To start your research check out the NCCI State Map.
What is the National Council on Compensation Insurance (NCCI)?
The NCCI is an independent advisory organization that is largely funded by insurance companies. As stated earlier the NCCI has a class code system that insurance companies look to for determining workers compensation costs. The NCCI provides their class codes based on industry data and trends they’ve analyzed independently. They also provide access to data reporting resources, manuals, and more to insurance companies.
States across the U.S. trust the NCCI’s expertise to help guide their risk evaluations. Some of these states include:
How Much Does Workers’ Compensation Cost?
The cost of workers’ compensation can vary depending on your business. Workers’ compensation rates are determined by:
- The laws in your state of business. Researching your states laws is a must. As stated earlier, some states are monopolistic or independent and some follow the NCCI class code system. This means the amount you pay can vary a lot.
- The size of your payroll. The more employees you have, the more your workers’ compensation will cost.
- The type of work your employees do. The more risk your employees are exposed to during the day, the more you’ll pay for workers’ compensation insurance.
As stated earlier, workers’ compensation class codes describe the level of risk specific jobs face. For example, a roofer faces a different amount of risk compared to a retail worker. Also a sales associate would face a different amount of risk compared to a taxi driver. This means that each job type has different workers’ compensation class codes. These class codes will translate into different costs for workers compensation.
Generally, the lower the risk in the job, the less workers’ compensation will cost. So, workers’ compensation insurance for retail workers will likely cost less than coverage for construction workers.
How to Find My State’s Workers’ Compensation Rates
The Hartford has individual state information on the workers’ compensation that’s available. You can reference this information on our workers’ compensation states page. You can also visit the NCCI’s website for more information on classification codes and rates.
The Hartford’s Workers’ Compensation Insurance Coverage
The Hartford can offer you more than just great rates for workers’ compensation insurance. Our workers’ compensation insurance also includes:
- A preferred medical provider network – that supplies employees with access to over one million medical providers.
- Prescription drug features – that includes more than 65,000 pharmacies throughout the U.S.
- Experienced nurse case managers – that will coordinate the right treatments to help employees regain their health.
- Pay-as-you-go billing – that helps you manage your cash flow effectively.