If you own a small business, it’s more than likely that you’re required to carry workers’ comp insurance coverage. Fortunately, getting a quote for coverage is now faster and easier than ever before. With Pie Insurance, small business owners can get a quote in 3 minutes—often at savings of up to 30 percent.
To make sure your workers’ comp insurance quote is as accurate as possible, review these frequently asked questions about getting a quote from small business owners like you.
Insurers use a standardized system of class codes to categorize the type of work an employee does. For example, the class code 8017 is a retail store employee.
A “governing” class code is the class code associated with the type of work that makes up the highest percentage of your total payroll. To provide a quote, Pie Insurance considers a number of factors including your governing class code.
Comp codes or class codes identify the type of work an employee does. Each code is used by insurers to estimate the hazards associated with particular tasks. Typically, it costs more to insure more hazardous work than less hazardous work. Insurers need to consider class codes (and the risks associated with them) in order to provide an accurate quote.
If you already have workers’ comp coverage, the easiest way to find your class code is to look at the “declarations page” in your policy documents.
If you don’t have a policy document to reference—or if you’ve never had workers’ comp coverage before—you can seek assistance from your state’s rating bureau.
If your business has locations in more than one state (and these additional locations are the primary offices for other team members) you may need to get a separate estimate for the total payroll in each individual state. You’ll need to talk with your insurer about whether or not you’ll need separate policies for each state or if you can get a combined policy.
If certain team members work remotely, you should add their payroll to the office they report to most often.
An Experience Modification Rate is a risk rating factor that is unique to your business. It’s used by insurers to compare the claims and payroll history of your business to similar businesses. Your Experience Modification Rate is used to adjust your insurance pricing based on actual and expected losses during the period of your coverage. Identifying the correct Experience Modification Rate for your business is very important to get accurate pricing.
Businesses with very low premiums may not be assigned an Experience Modification Rate in their state. Additionally, businesses that have been in operation for less than one year don’t yet have an Experience Modification Rate.
The easiest way to find your EMOD is to look on your latest workers’ comp policy declarations page. Alternatively, you can contact your state’s Advisory Organization or Rating Bureau. To find the appropriate contact information, check out your state’s website.
Know that it’s common for small companies (and businesses that have just started) to not have an EMOD. If your business does not have an EMOD, you’ll typically be assigned a default rating of 1.0, which means your expected workers’ comp losses will be treated as the average (neither higher nor lower than expected).
You should provide an estimate of the total cost of team members’ wages over the next 12 months. Include full-time and part-time workers that you pay directly, including owners and officers.
Exclude 1099 contractors and consultants. Typically, your total annual payroll amount should also include overtime, bonuses, commissions, vacations, sick leave, and holidays.
Now that you’re familiar with these frequently asked questions, you’re ready to start your quote.
Thanks for reading! Please note that this content is intended for educational purposes only. As laws change regularly, you should refer to your state legislation and/or an advisor for specific legal counsel. If you’re a small business owner, learn more about workers’ compensation insurance or check your current rate in 3 minutes.
