How much does it cost?

The cost of workers’ compensation insurance depends on several factors.

How much payroll do you have?

Workers’ compensation policies are typically issued for a 12-month period. Your premium cost is based on your projected payroll for that time. A higher payroll typically means a higher premium because you are covering more employees.

What type of business do you have?

Businesses with higher workplace risks usually have higher workers’ compensation rates. For example, a roofing business is expected to have higher claims costs than a bookkeeping business.

Each type of work is assigned a classification with its own rate. Oregon has about 600 different workers’ compensation classifications, each based on the expected cost of injuries for that work.

Contact our office if you are unsure which classification code to use. We can help figure out the best match to the work you do.

How is the premium calculated?

As explained above, the premium is mainly based on payroll and classification rates. Once you know both, you can apply this formula to estimate your premium:

Example: Widget Manufacturing’s classification rate is $5, and the projected 12-month payroll is $100,000. The company’s estimated premium would be $5 multiplied by $100,000 divided by 100 to equal $5,000.

This estimate does not include items such as taxes, premium credits, experience modifications, etc., but it provides a good starting point.

What is a minimum premium?

A minimum premium is the lowest amount an insurance company will charge for a workers’ compensation policy.

Some small businesses may have a low payroll, especially when starting out. If your low payroll results in a very small premium, the insurer may charge you its minimum premium instead.

If you are a small employer with low payroll, it is in your best interest to shop around, not only for the lowest rates, but also to ask what the company’s minimum premium is for your business classification. A company with a lower rate may have a higher minimum premium than a company with a higher rate but lower minimum premium.