Employers nationwide are required to provide workers' compensation insurance to their employees in case of a workplace accident. This protects workers from being jobless in case of an injury, and it protects employers from litigation stemming from on-the-job injuries.
Insurance rates for employers vary on the type of role or trade, the insurance carrier, a company's payroll, and a company's past loss experience. Rates will differ significantly from state to state, but since each state uses its own rules and formulas for determining benefits, rates within a state will vary only slightly. Insurance companies typically calculate workers' compensation rates using employees' pay scales, the type of work they perform, and the formula for benefits as determined by the state.
Most workers' compensation rate variation is caused by how an insurance company applies rating classifications to an employer. For instance, an employer's clerical employees will hold a lower rating classification than that of heavy-equipment-operator employees because clerical work involves less danger. These rating classifications are subject to scrutiny and argument among employers and insurance companies, and most states have organizations that deal with these disputes. In some cases, no insurance company is willing to insure an employer for workers' compensation due to the dangerous nature of the job the company performs. In that case, the employer can be insured by a state-run insurance fund.
In most states, the National Council on Compensation Insurance (NCCI) provides workers' compensation insurance information. The NCCI manages a vast database of workers' compensation information, and uses this information to project future workers' compensation claims. These projections are used to determine what a state's workers' compensation rates will be. The NCCI also informs states on likely costs of proposed workers' compensation litigation and areas in which each state's workers' compensation organizations are strong and weak.
If you are an employer trying to acquire workers' compensation insurance for your employees, there are a number of resources you can use to compare insurance rates. You can contact a state workers' compensation agency to get an idea of the type of coverage you need and the rates you can expect to pay. Then, you can locate a number of workers' compensation insurance companies to get quotes and terms of coverage. Below is a list of resources to get you started.