Workers Compensation can be a pain in the rear, but it’s imperative (and required in most states) to have this coverage to protect the business and it’s employees. Workers compensation cost uses various factors to determine the premium including the state the employee is located, the business’s claims history, and market trends. Most importantly though, is the type of work the employee does which is categorized into class codes.
Each state has their own set of class codes and guess what? We’re going to provide the list for each state and was originally published by classcodes.net.
First let’s take a refresher on workers compensation.
What Is Workers Compensation?
If one of your employees is injured on the job or experiences a work-related illness, workers compensation insurance will pay for the employee’s medical bills and a percentage of their weekly wage, among other things. In order to receive workers compensation benefits, your injured employees give up their right to file a claim against your business related to their injury. However, there are cases in which employees will give up these benefits and file a workers compensation claim if they believe that they can win the case. This usually occurs when employees believe that their injuries were the result of gross negligence or intentional harm on the part of their employers. If such a claim arises, employer’s liability coverage, which is usually built into the workers compensation policy, should cover the costs of the business’s legal defense.
What are Workers Compensation Class Codes?
Workers compensation class codes are codes that the insurance companies use to identify specific categories of work. For instance, you know a contractor supervisor by his title, however an insurance company knows him as “5606”.
Insurance companies need to be able to categorize various types of work into class codes to be able to effectively estimate workers compensation rates for each type of work.
For example, a 5606  (Contractor) will have more expensive work comp rate than an 8810 (Clerical) employee, because more dangerous work is being performed.
The insurance companies will then take all losses accumulated by each class code, and use them to factor a base rate for that type of work. If a particular company has proven to have losses above or below the industry average, their rate of insurance will adjust accordingly.
Why do some states have different class codes for the same type of work?
The rules and regulations for work comp are unique for every state. Most states utilize the NCCI class code system. They are the national council on compensation insurance, and have helped add consistency for work comp classifications across state lines. With states that use the NCCI workers compensation class codes, the classifications remain the same for each of those states. However, some states still remain independent, or monopolistic.
What is the National Council on Compensation Insurance (NCCI)?
NCCI is and independent advisory organization that is largely funded by insurance companies. Most insurance companies use the NCCI for various services, including statistical data for workers compensation rates. NCCI functions to obtain and provide accurate statistical loss data that is used to set manual rates for workers compensation insurance. NCCI is the most widely used classification system in the United States.
What states do not use the NCCI classification codes?
There are only a few states that do not use the NCCI workers compensation class codes. Those states are California, New Jersey, New York, Delaware, and Pennsylvania. Texas has recently converted over to the NCCI classification system; however, they do have significant variations in specific classification rules. While most states do use the NCCI class codes, it is important to remember that some states have additional workers compensation class codes that are unique to their state.
What is the NCCI Scopes Manual?
The NCCI scopes manual is used by insurance professionals (Such as underwriters) to identify the class code associated with each type of occupational work. The code is a three or four digit number associated to each type, or “classification” of work. The scopes manual offers detailed underwriting information that elaborates on how every type of work should be classified. Since the scopes manual is the industry standard for workers compensation class codes, it is important for every underwriter to have a copy. You can purchase directly from the NCCI Online Catalog.
Workers Compensation Class Code Chart
Use our chart below to find and view a comprehensive index of work comp classification codes for your state. Our class code lists also include a general description for each code, as well a link to the governing authority that published the list for your state.
Contact us at info@gamedayhr.com for a list of Preferred Insurance Brokers.
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