When a worker is injured as a result of his or her employment, the employer is liable for the payment of state-mandated medical and indemnity benefits to or on behalf of the injured worker. State law requires employers to purchase workers' compensation insurance to cover this liability or meet the requirements to be self-insured.
Classification and Rates
The primary component of the premium you pay for workers' compensation insurance is related to the industry classification(s) assigned to your business. Insurers have different rates for different industry classifications. The premium you pay for your workers' compensation insurance policy begins with multiplying your insurer's rate for your assigned classification(s) by the payroll generated by your employees assigned to each classification. Workers' compensation rates are applied per $100 of payroll. Thus, a rate of $4.90 means that for every $100 of payroll, $4.90 in premium is generated.