Can Adding Products or Services Change Your Workers Compensation Insurance Rates?

If you offer new products or services, it's possible that your workers compensation insurance rates may change. That's because the type of work that your employees perform is the primary driver in workers compensation insurance rates.

How Workers Compensation Rates Work
Like any other insurance coverage, workers compensation premiums are based on the risk that you'll file a claim. In this case, it's the risk that your employees will be injured on the job. Each state has a rating system that takes into account both the type of work your company does and specific job functions.

For example, a company that uses heavy machinery will typically pay higher rates than a company that only does phone sales. The premium for a machinery operator will often be higher than the premium for an accountant in the same company.

What Happens When Your Products Or Services Change?
When your products or services change, that means you might be classified into a new industry or have new job titles. If the work is riskier than work you had been doing in the past, you might see a rate increase. Similarly, if the work has less risk, your rates could go down. If the changes to your business result in more worker injuries or fewer injuries and change the number of claims you file, your rates could also go up or down.

Review Your Worker Classifications
You should always periodically review your worker classifications, but it's even more important when you're changing your company's offerings or restructuring your employees. If you're using the wrong classification, you could be paying too much for workers compensation insurance. Or, you could be at risk of getting in trouble for not having adequate coverage or for having a claim denied. Even though states often periodically audit workers compensation premiums, do this on your own to avoid any potential problems.

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