How premium is calculated
Payroll for each class code, multiplied by a rate for that code, adjusted by your experience modifier. Change any of the three and the premium moves.
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Workers compensation
Workers compensation for Tennessee contractors, and the rules that catch people out.
Construction is held to a stricter workers compensation standard in Tennessee than most other industries, and the threshold catches small contractors who assume the general rule applies to them.
The problem
The construction threshold
For most Tennessee employers the workers compensation requirement begins at five employees. For the construction industry it is much lower, and coverage obligations can begin with a single employee. Contractors who came from another industry, or who have only ever had one or two people on payroll, routinely assume the five employee rule protects them. It does not.
Owners, officers, partners and sole proprietors in construction are treated differently from other industries as well. Exclusion is not automatic, and where an exemption is available it generally has to be registered with the State rather than simply assumed.
Uninsured subcontractors are the other common trap. If a sub does not carry their own coverage, their payroll can land on your audit as if they were your employee. Collecting a certificate from every sub before they start is the cheapest insurance policy you will ever buy, because it costs nothing.
None of this is legal advice and requirements change. Confirm your specific situation with the Tennessee Bureau of Workers' Compensation or your attorney.
Coverage
What we place, and what to read before you rely on it.
Class codes
Assigned by the work actually performed, not by your license or your company name. A contractor doing three kinds of work should usually have three splits, not one blended code.
Experience modifier
Once you have enough premium history you get a mod. Below 1.0 it discounts your premium, above it surcharges. It follows you between carriers.
Audit
At the end of the term the carrier reconciles estimated payroll against actual. This is where a bad class split becomes a real bill.
Certificates from subs
Every uninsured sub is potential payroll on your audit. Collect certificates before work starts, not at renewal.
Ghost policies
A minimum premium policy covering owners only, used to satisfy a contract requirement. Sometimes the right answer, sometimes a gap. Know which one you have.
Submission
What to have ready for a workers compensation quote
Having these ready is the difference between an indication in two days and a submission that sits for three weeks.
- Payroll for the coming year, split by type of work performed
- Current and prior class codes, if you have been covered before
- Your experience modification worksheet, if you have one
- Number of employees, and whether owners are included or excluded
- Subcontractor spend, and whether each sub carries their own coverage
- Three to five years of loss runs
- Your most recent audit results
Related
Send the declarations page and we will tell you what is actually covered.
No fee to shop your coverage. If the standard market will not write it, we go to surplus lines and explain the difference before you sign anything.
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