Premium Calculation:  Frequently Asked Questions...

 

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What is a governing class code?

The classification (other than a standard exception) that best describes the workers compensation exposure of an employer's business.  This is also normally the classification that contains the largest amount of payroll.

What are NCCI Standard Exception Codes?

Certain employee groups are rated separately instead of being included under the main class code. The NCCI Standard Exceptions Codes, for workers' compensation, are:

 

  • 8810 Clerical Office

  • 8742 Outside Sales

  • 7380 Drivers

 

If, however, the scopes class code description states that one of these employee group are included under the main class code, then the Standard Exception guideline would not apply.

What is the Expense Constant?

The Expense Constant is a flat charge added to every workers' compensation policy and represents the common administrative expenses associated with the issuing and administering of a policy.

What is included / excluded from payroll?

Here is what is Included:

 

  • Wages or salaries

  • Commissions

  • Bonuses and stock bonus plans

  • Overtime pay (see excluded for more information)

  • Pay for time not worked such as holidays, vacation, sick pay

  • Payment by an employer for items that would normally be paid by the employee

  • Payment for piecework, profit sharing, or incentives

  • Rental value of an apartment or house, received by the employee as part of their pay

  • Meals received by the employee as part of their pay

  • Store certificates, merchandise, credits or other substitutes for money received as part of their pay

  • Payments for salary reduction from employee’s gross pay, such as savings plan, cafeteria plan, retirement

  • Davis-Bacon wages

  • Annuity plans

  • Expense reimbursements to employees where employer cannot show it was a valid business expense

  • Payment for filming commercials or other advertisements

 

Now, for what is excluded:

 

  • Tips and other gratuities

  • Payments by the employer to group health insurance, group pension plans, Davis-Bacon Act

  • Payment to the employee for invention or discovery

  • Premium overtime pay (1/3 of time and a half overtime, or 1/2 for double time pay)

  • Severance Pay, except for time worked or accrued vacation

  • Payment for active military duty

  • Employee discounts on goods purchased from their employer

  • Expense reimbursements that are shown to be valid business expenses

  • Money for meals during late work

  • Work uniform allowance

  • Sick pay paid by a third party, such as disability insurance carrier

  • Employer-provided perks, such as use of automobile, club membership, event tickets, airfare

  • Employer contributions to salary reduction such as savings plan, cafeteria plan, retirement

What is "Casual Labor"?

According to the Florida  Statute 440.036:

(11) “Casual labor” means labor that is occasional, incidental, or irregular, not exceeding 200 person-hours in total duration. As used in this subsection, the term “duration” means the period of time from the commencement to the completion of the particular job or project. Services performed by an employee for his or her employer during a period of 1 calendar month or any 2 consecutive calendar months, however, are deemed to be casual labor only if the service is performed on 10 or fewer calendar days, regardless of whether those days are consecutive. If any of the services performed by an individual on a particular labor project are not casual labor, each of the services performed by the individual on that job or project may not be deemed casual labor. Services must constitute casual labor and may not be performed in the course of the employer’s trade or business for those services to be exempt under this section. 

What is a Consent to Rate policy?

For most insureds within the State of Florida, coverage is available within the voluntary market and is charged at state set rates for workers' compensation.  Beyond that, plans may be available, based on premium size and losses that will allow credits and dividends.  For some insureds, however, obtaining coverage within the voluntary market may be difficult.  Perhaps the insured has unfavorable loss history, small payroll or simply be a higher risk operation.  For a limited amount of insureds (currently 10% of the carriers' writings), the state allows carriers to issue a "Consent to Rate" policy.  A “Consent to Rate” policy is one in which the insured agrees to allow the insurance company to charge a higher rate or set minimum to be able to obtain insurance.

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"It's not hard to make decisions once you know what your values are." 

 

Roy E. Disney

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