Frequently Asked Questions

Q: What is workers compensation insurance?

A: Workers compensation is an insurance plan provided by the employer (by law) to pay employee benefits for any job-related injury illness, disability, or death.

Q: How is workers compensation insurance priced?

A: Generally speaking, annual payrolls for each category of work performed by an employer are assigned a class. Insurers assign a rate to each class for every hundred dollars in annual payroll. These are totaled and multiplied by your company's experience modification factor. There may also be volume discounts, assigned risk surcharges, assigned risk adjustment premium, and other possible discounts or charges varying by state and insurer.

Q: What is an experience mod?

A: The NCCI calculates your experience modification factor by comparing your actual loss experience to your expected loss experience over the previous three policy periods, not including the more current year. If your losses are lower than expected, your experience mod should be less than 1.00, which will reduce your premium. If you have higher than expected losses for your industry, your experience mod should be greater than 1.00, and you will be charged additional premium. Your policy must cost more than $7,000 for one year or $3,500 for two consecutive years to qualify for experience rating.

Q: How can I reduce my workers compensation premium?

A: First, you need to get a competitive quote. Second, you must consider deductible options. Third, you need a professional agent to evaluate your experience modification worksheet. Errors are common in classification of work performed, as well as claims paid, and calculations on the worksheet.

Q: What is the assigned risk or "risidual market"?

A: The assigned risk market is a state-by-state mechanism that has been established to ensure that all employers may procure workers' compensation insurance.

Q: Why am I in the residual market?

A: Many employers are in this market because they are engaged in an inherently risky industry, have bad loss experience, are too small and/or are just starting a new business. Also, quite often an employer's current agent does not have access to sufficient insurance carriers; therefore the only option is to place their client in the risidual market.

Q: What is an audit?

A: An audit is performed by the insurance company shortly after the termination of the policy period. The audit process compares estimated to actual payrolls to estimate a final premium. Once the audit is completed, the policy's premium is adjusted as needed.