For business owners who have employees working for them, a workers compensation insurance is required by the law before they can operate. If you talk about workers compensation insurance premiums, the pricing is not the same across businesses. For most states, the use of workers comp codes is necessary to determine the pricing for workers compensation insurance premiums. For most states, they use a code system that is created by the NCCI or National Council on Compensation Insurance. The exposure and risks of business are classified using this coding system. This would lead to better estimates of the amount of workers compensation insurance premium that you will be paying. And yet, the NCCI classification is currently not in use in the states of Pennsylvania, Delaware, California, New York, and New Jersey. Even if Texas makes use of this system, there are some deviations from the classification system.
What you need to know about the NCCI is that it is an independent organization that is run for profit. The statistical data from the NCCI is what insurance companies use for them to determine how much companies must pay for their worker’s compensation insurance premiums. Figuring out workers comp codes is not as easy as it seems. It does not matter who is assigned to do the classification because there are still some businesses that make classification mistakes. If misclassification is done, the insurance premium for the worker’s compensation can either be too high or too low. Upon expiration of the policy, your company might suffer from large bills after the audit is done.
If you have plans of using NCCI information, you cannot simply get them online for free. Because the organization is run for profit, they sell a manual with their proprietary information.
Your business as a whole is what these workers comp codes are made for. Simply put, they will not be minding the individual jobs that form part of your business. When you have a pharmaceutical business, for example, and have a few clerical workers, your business is still classified under the code for pharmaceutical exposure and not the code for clerical exposure. There is, however, an exception to the rule if the business is related to construction work. For construction businesses, though, you can have as many code classifications as necessary for an individual employee. To check your qualifications, you have to provide the hours that you have for each code classification of workers compensation.
Once again, there are a lot of challenges to figuring out the comp code applicable to your worker’s compensation insurance. It is a good thing that there are expert consultants who will be more than willing to review and modify the code or codes that your business is using. Only with the right workers comp codes can you rest assured that unexpected bills will be avoided after a workers comp audit leading you to save thousands of your money.