Contractors want one number for workers comp, and it is the coverage where a single detail can swing the price the most. The premium is built by assigning each worker to a class code, applying that class rate to the payroll in it, and then adjusting the whole thing by your experience mod. The honest way to get a real number is a quote built on your actual payroll, trades, and loss history. What follows are the drivers ranked from the ones that move the price most to the ones that build slowly, and why each works the way it does. For how the year-end audit reconciles all this, see the contractor workers comp audit explained.
Class codes by trade, the biggest lever
Workers comp starts by putting each worker into a class code that reflects the work they do, and each class carries its own rate. The gap between classes is large. A roofing or structural class sits far above a low-risk clerical class, so how your payroll splits across classes drives the number more than almost anything else. This is why class code accuracy is the single highest-value thing to check on a contractor policy. If office staff, estimators, or supervisors are swept into a field class, you are paying a field rate on payroll that does not carry field risk. See class code misclassification for how this happens.
Payroll by class
Once workers are classed, the rate is applied to the payroll inside each class. That means the total payroll matters, but the split matters just as much. Overtime, bonuses, and how you report each worker all feed the calculation. Keeping clean records of which payroll belongs to which class is what keeps the audit honest and the premium fair, because a sloppy split usually costs you at audit time.
The experience modification factor
The experience mod is a multiplier applied to your whole premium, based on how your claims history compares to other contractors in your class. A mod below the baseline lowers everything. A mod above it raises everything. Because it touches the entire premium, it is one of the most powerful drivers, and it is the reason two identical crews can pay very differently. The mod is earned over years, which is what makes claims discipline worth the effort.
Claims history
Feeding the mod is your loss record. Frequency of claims tends to matter as much as severity, because a pattern of small claims signals ongoing exposure. Clean years lower the mod over time, while a bad run raises it and lingers in the calculation for several years. This driver rewards patience and good claim handling, since how you manage and close out a claim shapes what it eventually costs your rating.
Safety program and how the account reads
Your safety posture ties the others together. A documented safety program, return-to-work practices, and training do not change the base rate, but they reduce the claims that drive your mod and they help an underwriter read the account favorably. This is the input you most control, and its payoff shows up over time in a better mod rather than an instant discount. For when to act on class and rating issues, see the best time to fix contractor class codes.
Questions to ask your advisor
- Is every worker in the class code that matches the work they actually do?
- Are office and supervisory staff split out of field classes correctly?
- What is my experience mod, and what is driving it up or down?
- Which open claims are affecting my mod, and how are they being managed?
- Is my safety program documented in a way that helps how the account reads?
A coverage review looks at both sides: that you are not overpaying because of a misclassification or a stale mod, and that you are not underinsured or exposed to a painful audit. On workers comp, the class split and the experience mod are where the money usually hides.
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