Workers Compensation Insurance Rates - How Are They Calculated?

A big expense that many companies have to enduredetermines the risk classification for every job. To
is workers compensation insurance. Obviously, thedetermine it they look at two statistics. First, what
more employees your company has working for it,are the average cost of medical bills incurred by
the more you will pay for coverage. For many smallinjured workers. Second, how much are the
business owners, just how workers compensationindemnity payments to the injured workers. (The
insurance rates are determined is a mystery. While it'samount paid for lost work time.) The higher the
true that the exact formula varies from state tonumbers for each, the higher the risk classification will
state, the formulas used are very similar no matterbe.
what state your company does business in. Below isOnce the risk classification is established it is then
a description of how workman's compensationtranslated into a dollar amount. A low risk classification
insurance rates are determined.dollar amount example would be $1.50 for every
The biggest determining factor that will affect how$100. For employees that have this risk classification,
much you pay for each of your employees will beyour company would pay $15 for every $1000 each
the risk classification that is assigned to each ofemployee earns.
them. If you own a window washing company, it willTo lower the cost of workers comp coverage, there
cost your company much more to insure the windoware several things you can do. Your company's
washers than it will to cover the secretary.safety record plays a big role in how much you are
Obviously, the risk involved in being a window washerultimately charged. Also, offering good health
is much greater than it is in doing office work.insurance policies will go a long way in lowering your
Every state has a workers compensation board thatrates.