Worker's compensation insurance, job classifications, job risks and insurance premiums are all related. Job classifications, which are based on specific ratings and descriptions for all types of jobs, are determined by the National Council on Compensation Insurance (NCCI), the insurance industry’s ratings bureau. There are more than 600 different job classifications, and more are being added all the time, so it isn’t surprising that 30-35 percent of businesses have classification errors. But have you considered the potential impact on your business insurance costs that an erroneous job classification can bring?
Workers' Compensation Insurance and Risk-Based Job Classifications
Why should you care? These ratings, based on an estimated level of risk, help determine how much Workers’ Compensation premiums you will pay for each job classification. The following misclassifications are examples of mistakes that can significantly increase your Workers’ Compensation premiums:
- An administrative assistant who sits at her desk all day is classified at the same job risk level as a tree trimmer who spends most of her day swinging through the trees.
- A dispatcher who spends most of his time on the phone is classified at the same job risk level as a driver who spends most of his time behind the wheel of a tractor trailer full of flammable materials.
How can you avoid misclassifications?
- Review your NCCI Classifications
- Don’t use the same classification for everyone in your company. Classify each worker individually.
- Ask your insurance agent how jobs are being classified.
- Read your policy.
- Don’t let the insurance agent copy from an old policy from year to year. Things change; your business changes.
Don’t wait for your workman's compensation insurance premiums to skyrocket to discover something is off kilter. For more information about job classifications and controlling workers’ compensation premiums, contact American Insuring Group at (800) 947-1270 or (610) 775-3848.