5 Factors That Impact Your Workers Comp Insurance Premium

Bryan Gutowsky • December 1, 2023

Michigan Workers Compensation Insurance - 5 Factors That Impact Your Workers Comp Premium

What are the five factors that impact your workers compensation insurance premium?


Industry: Different industries have varying levels of risk. A construction company will have higher premiums than a mortgage company due to the physical nature of the work, which poses more inherent risks compared to an office-based business.


Payroll: The premium is based on the total payroll expenses. This is because it's directly related to the potential exposure of risk and the number of employees covered. A higher payroll means higher premiums.


Claims History: Insurers take into account the company's history of workers' compensation claims. A higher frequency of claims or severe incidents could lead to increased premiums, as it indicates a higher risk profile for the insurance company.


Job Classification: Jobs with higher inherent risks are charged higher premiums. For instance, a clerical worker in an office will have lower premiums compared to a construction worker or someone involved in manual labor.


Experience Modification Factor (MOD): This factor is based on a company's claim history in comparison to similar companies in the industry. A good safety record can lead to lower premiums, while a poor record will increase costs.


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