THURSDAY, AUGUST 16, 2012
The cost of Workers Compensation insurance for a business is based on the number of employees, types of duties performed, and the payroll. Also, factored into the preiums are prior losses.
Each state has different rates, however the price or premiums are calculated the same way. The premiums are based on the riskiness of the business and duties performed and the salary for that occupation.
For example, a Roofer in the eyes of the Workers Compensation industry is very risky and consequently the rate per $100 of wage you pay your employees is high. In the carriers eyes the risk is falling off the roof and causing long term damage to the worker which results in high losses paid out. In Illinois the rate can be anywhere between $30 and $40 per $100 wage you pay the Roofer! So, if you have a an employee that gets up on the roof and does the work and you pay him/her $20,000 per year, the annual cost would be $6,000 based on $30 rate.
If you have a clerical worker, the workers compensation carriers find that as low risk and the premiums reflect it. The carriers view this "job classification" less risky as the employee is in an office environment with little risk of getting hurt. In Illinois the rate can be anywhere between .27 to .90 per $100 of wage. So, for example, if you paid the clerical worker $20,000 per year the annual cost would be $54.00 per year!
These are just some basic examples and other factors like minimum premiums, modification factors and the like can factor into the premium. However, this should give you an idea of how premiums are factored.
Workers Compensation is required in most states.
If you need a quote, explanation of coverage and rates at Anderson Insurance Brokers we welcome your call or email. We can be reached at #630-681-8000, #773-588-3500 or toll free at #866-681-8700.
Posted 12:41 PM
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