Workers’ comp class codes are the key to figure out what a workers’ comp insurance policy will cost. From the small mom-n-pop shops to the largest employers, all policies are written based on these 4 digit class codes. Where do they come from, what do they mean and how do they affect your workers’ comp policy?
There is a big publicly accessible list that assigns an arbitrary number to every job role, industry and business type. That number is called the class code. They are 4 digits long and can vary from state to state. Think of it like a barcode to easily reference the information related to that job role. The list is created and maintained by The National Council on Compensation Insurance (NCCI). The NCCI is an independent advisory organization for 34 states across the country.
For example, a landscaping company will have employees who have different job roles. Similar roles are grouped together under the same class code. The secretary and billing department will be grouped as the clerical class code 8810. The gardeners who do basic lawn care and leaf blowing would be class code 9102. However, if they also do tree removal, they’d have a different number and it would be classified as 6217.
For every industry, The National Council on Compensation Insurance (NCCI) analyzes how likely the employees are to get hurt and then assigns a rate ($ per every $100 of payroll) that is determined by how risky the work is. So, each class code number has a corresponding rate. The rate is what the insurance company uses to determine how much the policy will cost. (Hint: riskier jobs have more expensive policies)
To continue the example from before, the secretary and billing department who we classified as clerical are least likely to hurt themselves so they have quite a low rate.
The typical gardener who is handling sharp equipment and doing manual labor is much more likely to hurt themselves and will have a higher rate.
The gardener who cuts down trees is even more likely to severely hurt himself since he is climbing many feet off the ground and dealing with huge trees, so he has an even higher rate
Workers’ compensation class codes vary from state to state, but most areas of the country use the NCCI’s classification system to determine how to rate a policy and figure out how much premium should be based on the employer’s class code and its rate. In most cases, you can do a quick Google search to determine the average workers compensation rate for a specific class code.
The NCCI’s simple-to-navigate resource can help you find your class code.
Don't worry if you aren't sure what your class code is. That's what we're here for! Insurance agents are knowledgeable about workers' compensation insurance and the class code system and can help you find the correct code for your business.
Having the correct class code for your business is important, as it affects the calculation of your workers' comp insurance premiums. Your insurance agent can help ensure that you have the correct code, which can help you avoid overpaying for insurance or facing a coverage gap in the event of a workplace injury or illness.
Now that you understand what workers comp class codes are, how they get assigned to different job roles and how their corresponding rates work, it’s time to find out what your policy would cost. You can use our no-risk, instant quote generator to find out what the workers compensation premium would be for your business. You don’t even have to know your class codes, just enter every type of job role in your business and the software will do the rest for you.
Learn more about how your workers comp premium is calculated or start and instant quote and we'll figure out your class code for you!