Insurance Perspective

Ben Cavallo

C&S Insurance Agency

Workers’ Compensation Insurance for Construction

Although the specifications and requirements vary, every state requires businesses to have workers' compensation insurance. Workers’ compensation (or workers’ comp, as it’s frequently called) covers injury or job-related illness for employees. While paying insurance premiums can be costly for employers who have a high payroll, there are incentive programs to lower their premiums.

Contracting Classification

Premium Adjustment Program (CCPAP)

The CCPAP is a program developed by the National Council on Compensation Insurance (NCCI) that encourages the construction industry to pay its employees a competitive wage. With CCPAP, construction companies with certain contracting class codes that pay their employees a higher wage in their area can apply for an insurance discount. This encourages construction companies to pay their employees well — without high premiums.

Currently, the following states participate in the CCPAP program: Alaska, Connecticut, Delaware, Florida, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Virginia, and Wisconsin.

How Much Does Workers’ Comp Cost?

Workers’ comp is calculated by three main factors: employee classification codes, payroll, and experience.

Employee Class Codes (ECC): Every type of work is assigned a unique classification code (a three or four-digit number). These codes are then given a rate based on the risk level of the work.

Payroll (P): This refers to the list of your employees and their pay/how often they work.

Your Experience Mod (EM): Your company’s experience modification factor is calculated annually; it’s a ratio of actual-to-expected losses. If you submit more compensation claims than similar businesses in your area, your EM will be higher.

Here’s a closer look at how these three factors form your annual premium:

ECC x P x EM = Workers’ Comp Premium

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Tips to Reduce Workers’ Comp Costs

• Continually train and test your employees on the latest safety protocols. • Make sure your employees’ information is up to date. • Submit claims in a timely manner. • Review your employee class codes for accuracy. • Create return-to-work programs for injured workers.

Workers’ Compensation Insurance can be tricky to navigate, but there are resources to help you find the right — and most affordable — premium. The CCPAP helps companies that pay a higher average wage to workers reduce their Workers’ Comp premium. If you have any questions about workers' comp insurance or the CCPAP, we recommend reaching out to your insurance

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