If you have a construction business and you have employees, you should have a workers compensation insurance, and the same goes for other businesses with more than one employee. The pricing for the premiums of workers compensation insurance differs from one business to another. The use of workers comp codes is helpful in figuring out what pricing of workers compensation insurance premiums must be followed. The code system made by the NCCI or National Council on Compensation Insurance is what most states follow. 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. Though Texas has used this system, they have deviations to the classification codes.
The NCCI is an independent organization that runs for profit. In the process of determining the insurance premiums for workers compensation for companies, a lot of insurance companies rely on the statistical data produced by the NCCI. The process of determining the correct worker’s comp codes for a business is not easy. It can still get very common for businesses to use the wrong classification no matter who has been tasked to assign the classification. When the classification is not done properly, the workers compensation insurance premium could be too high or too low. Once your policy expires and a workers compensation audit is done, you will find that you will be paying for a large bill.
You do not simply go online to gain access to important NCCI information. Before you can access proprietary information, you have to buy their manual because they are run for profit.
Your business as a whole is what these workers comp codes are made for. This means that they do not pay particular attention to the varying jobs inherent in 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. The same cannot be said when the scenario involves dealing with a construction business. If you own construction business, you can make use of different code classifications for every employee. To check your qualifications, you have to provide the hours that you have for each code classification of workers compensation.
Again, determining the correct code for workers compensation is very hard. There are consultants that can help your business review the codes and modify them accordingly. When you make use of the most fitting workers comp codes for your business, you avoid wasting a lot of your money and paying for something in the end that you did not expect once an audit is made.