Which factor is used to determine the rate for WC&EL policies?

• A. Employee payroll
• B. Number of employees
• C. Accidents per year
• D. Employer classification codes

Answer: (D)

The rate for WC&EL policies is driven by the employer’s classification code. This code describes the type of work and its hazard level, and rating bureaus assign a base rate to each code (usually per $100 of payroll). That code sets the starting cost per exposure unit; the actual premium then uses that rate with the employer’s exposure (payroll) and any applicable modifiers.

Payroll affects how much premium you pay once the rate is set, not the rate itself. The number of employees isn’t a direct rating factor. Accidents per year influence the experience modification factor, which can change the premium based on safety history, but they don’t determine the base rate.