What are class codes? Good question.
Class codes, also called classification codes or workers’ compensation class codes, are three- or four-digit codes insurance companies use to estimate rates based on the risks of the type of work an employee performs.
Some states have their own series of workers’ compensation class codes, but many states use the codes established by the National Council on Compensation Insurance (NCCI), an independent organization that gathers and analyzes data on workers’ compensation insurance. The NCCI State Map shows which states have designated NCCI as their licensed rating and statistical organization.
How class codes are used
Because workers’ compensation class codes describe particular job types, insurance providers use them to estimate the risks connected with those jobs. Therefore, workers’ compensation class codes are an important factor in determining workers’ compensation rates. Riskier jobs carry higher premiums.
The workers’ compensation rate equation can have multiple variables, but the basic ingredients are:
Workers’ compensation class code (type of work)
Payroll (size of workforce)
Experience modification factor (history of workers’ comp claims)
Find your workers’ comp class code
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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.