How is the cost (the premium) of a workers’ compensation policy calculated?

The price you pay is based on many different factors including your payroll, the kind of business you have, the job duties of your employees, and where your business is located. In a simple example, what typically happens is that your industry class is determined, your payroll is multiplied by the “base rate” approved by your state’s department of insurance, and then, the result may be adjusted for several factors, including prior claims experience, risk characteristics such as a safety program or training program, or in some states a factor could be where you are located in the state.