How workers compensation codes affect a contractor’s workers
Workers comp codes play primary role on the premium a contractor will pay for his workers compensation insurance policy. There is a different rate applied to various trades and trade function specifically centered on risk. Example – a sub who regularly uses a ladder to do his work will be classified at a higher risk than one who does not. Someone in the office who sits at a computer all day is at a much lower risk than any of your subs that are directly working in the field.
Workers comp codes, in general, are applied to the primary description of the business activities of any operation, that description in which the most payroll of the operation falls. When it comes to contractor insurance you may find, (unlike in a retail store where all employees are categorized under a blanket code of “retail store,”) multiple workers compensation codes being used for the same business. So it’s absolutely critical for California Contractors to use the proper classification code as it applies to the specific duties of workers rather than blanket based on the trade.
Incorrect classification can cost a contractor many thousands of dollars a year in overpaid workers compensation premiums. Due to the array of class codes and pay factors for California contractors, it is crucial that your policy and class codes are review with a broker each year that understands the contracting business as it relates to contractor insurance.
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