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workers' compensation insurance coverage

Workers' Compensation Insurance Coverage

A Wisconsin Law

State law in Wisconsin mandates Workers' Compensation Insurance. The purpose of the workers' compensation system is to provide financial and medical benefits to the victims of "work-related" injuries and their families regardless of fault.

How Workers' Compensation Insurance Rates Are Determined

The Wisconsin Compensation Rating Bureau (Bureau) establishes Workers' Compensation rates. The Bureau is responsible for establishing, maintaining and administering rules, regulations, classifications, rates and rating plans to govern the transaction of workers' compensation insurance in Wisconsin. The Bureau files with the Office of Commissioner of Insurance (OCI) every manual of classifications, rules and rates and every rating plan for use in Wisconsin. Insurance companies writing workers' compensation insurance may not deviate from the approved rates and rating plans. All insurance companies must charge the same rates.

The rate for each classification code is the amount of premium for each $100 in remuneration provided by an employer to his or her employees. The minimum premium for each classification code is the lowest premium required in order to provide workers' compensation insurance.

How Claims Affect Rates

The workers' compensation premium that a business pay can be increased or decreased through a process known as the Experience Rating Plan, although employers whose business is too small to rely on past losses as statistically reliable predictors of future losses are not subject to experience rating.

In workers' compensation experience rating, the actual losses of the individual employer are determined for a three-year period, not including the most recent policy year. The losses are currently capped at $5000 maximum per claim, which makes the frequency not severity of losses more important for determining experience rates. This experience is then compared to the average or expected losses for similar businesses. If the employer has lower than average losses, a credit is given, while poorer than average experience carries a debit rating. Experience rating takes average loss experience (rates), and modifies it by the individual employer's own loss experience.

Many businesses make the mistake of thinking an experience modification of 1.00 is good. But that is the equivalent of saying that a "C" on your report card is good.

Just like you would want an "A" on your report card, you want a experience modification of less than 1.00, so you are paying less than the average workers' compensation rates.

Coverra Insurance Tools to Help Reduce Workers' Compensation Costs

Coverra Insurance Services has the tools to help you reduce your experience modification. Depending on the size of your premium, you could realize savings of thousands of dollars annually. Ask your Coverra agent how you can save money on your workers' compensation insurance!

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