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How Workers’ Compensation Premiums are Calculated

Knowing your employees and your business are protected in case of accidents through your workers’ comp policy inspires confidence. The confidence that you, your employees, and your business can continue to grow and evolve because Cerity is taking care of the details, so you don’t have to.

Most states require workers’ compensation coverage the moment you hire your first employee, so purchasing workers’ comp insurance is something nearly all businesses will require.

So how are workers’ comp premiums calculated?

Like most insurance, the cost of workers’ compensation insurance depends on several factors.

At Cerity, the size of your payroll, location, and business’ past history of work-related claims may all impact your policy premium.

Companies are placed in groups or classifications with other companies that do similar things and therefore have similar operations and risk. Each group or classification is associated with ‘base rate’ which serves as a starting point for calculating premium.  From there, adjustments — both positive and negative — are made based on those various factors.

Generally speaking, the more dangerous the job the higher the premium. For example, employees who work in restaurants or spend their days around dangerous equipment, such as knives while prepping meals on slippery kitchen floors, may have higher risks. According to the U.S. Bureau of Labor Statistics, some of the most dangerous jobs in 2017 unsurprisingly included loggers, fishers, pilots and roofers.

But even those employees facing relatively few risks can get hurt. In fact, one of the most common work-related injuries is a slip and fall. That’s why it is important to carry the right insurance to ensure employee safety and to protect your business.

What can I do to help my bottom line?

Cerity can help. We provide tips to help you provide a safe workplace and reduce risk. We also evaluate all of the factors that go into calculating the policy for your business, leveraging smart technology, predictive modeling, and decades of industry experience to provide you an affordable quote. If you have any questions, our member services team is happy to assist you.

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Learning Center Resources


  • Top Workers’ Comp Questions
  • Small Business Resources
  • Workplace Safety Tips