Workers Compensation Class Codes

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What Workers Compensation Insurance Class Codes are All About:

Workers Compensation Class Codes are codes, often a series of numbers, used by insurance companies to identify specific professions or types of work. While their title may commonly identify one of these categories, for example an insurance companies know would know a Soybean Farmer by their class code.

Using these codes, insurance companies can more easily determine the Workers Compensation needs of a specific company. Depending on the type of work associated with the class code, an insurance company will determine the extent of which to compensate an injured party. Compensation and benefits are determined by the type of work, the risks involved and a given company’s insurance history.

Read on to learn more about Workers Compensation Class Codes.

How are Businesses Classified Using Class Codes?

Insurance companies usually use a National Council on Compensation Insurance (NCCI) scope manual that categorizes class codes by different occupations. The NCCI is an independent organization company that is funded by insurance companies to take on an advisory role. In December 2015, the NCCI created a database with more than 700 industry standard Workers Compensation Class Codes. For the majority of states that use the NCCI class code system, the codes are generally consistent, however there are minor exceptions dependent on where your company operates.

Depending on the type of profession, a Workers Compensation Class Code will be used to identify which types of work involve the greatest risk. Class codes that identify dangerous types of work will require employers to pay higher premiums as the risks involved in that profession are greater. Each code in the manual is three or four digits long and is used as an industry standard. In the manual, industry standard class codes describe the type of work and why it is classified the way it is.

Different states have different codes as every state has its own rules and regulations for Workers Compensation. While the majority of states have adopted the class codes of the NCCI manual, some states have decided to remain independent and set their own standards.

To find your class code, go to this site and click on your state. Easy.

What are the Benefits of Workers Compensation Class Codes?

Workers Compensation Class Codes help insurance companies provide compensation to injured employees and premiums to companies that are based on industry standards. These industry standards are a form of advocacy by the NCCI that seeks to ensure that a precedent is set, maintained and followed by insurance companies across the United States. Without Workers Compensation Class Codes, insurance companies or employers may not provide injured parties with the compensation and benefits that they deserve when they are forced to take time off of work.

As some professions involve more risks for workers than others, industry standards that take into account the dangers of certain professions is an important benefit of Workers Compensation Class Codes. By requiring employers to invest in higher premiums in fields with greater risk, employees are better protected by industry standards. Without these industry standards, those working in dangerous fields may not receive as much Workers Compensation.

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