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What US businesses pay for insurance, and why

Try a coverage (“general liability”), a business (“roofer”), a state or a class code (“8810”).

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How to lower business insurance costs: levers with a documented mechanism

Premiums fall when an input to the rating formula changes: the class code, the payroll or sales base, your experience mod, a filed credit, or the share of each loss you keep. Florida's workers' comp plan carries a drug-free workplace credit of up to 5%, and Wyoming's state fund lists 10% (state-published figures, checked 13 October 2026).

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Contents10 sections

Key takeaways

  • Fix the class code and payroll split first: Ohio's rule refuses estimated or percentage splits and assigns the employee's whole payroll to the highest-rated class when records lack actual hours⁠4.
  • A mod counts only 30% of a medical-only claim in NCCI's plan, and the experience window is usually three years, so a year of clean results works through the mod slowly⁠1.
  • Florida's filed credit for a qualifying drug-free workplace program is up to 5%; Wyoming's state fund lists 10% for its Drug-Free Workplace program⁠7⁠8⁠9.
  • Washington's Retro program can return part of your premium or bill you more; the assessment risk is stated by L&I itself⁠10.
  • Without proof of a subcontractor's coverage, the insurer's audit can add the subcontractor's payments to your payroll; an Alaska decision upheld such an audit under NCCI Rule 2-H⁠12.

Quick facts

Florida drug-free workplace creditup to 5% of workers' comp premium⁠8
Wyoming Drug-Free Workplace discount10%; Safety Discount 3.33% to 10%⁠9
Ohio roofing (5551) base rate, from July 1, 2026$5.7709 per $100 of payroll⁠3
Medical-only claims in an NCCI mod30% of the actual amount counts⁠1
Washington Retro period12 months, may begin any calendar quarter⁠10

Start with inputs you can prove

Every lever below changes one term of rate × exposure × modifications. Generic advice does not, so this page lists only levers where a statute, a regulator, a rating organization or a state fund publishes the mechanism. Where a popular lever (payment plans, bundling into a businessowners policy, fleet telematics) could not be backed by an official source on 13 October 2026, we say so at the end rather than quote a vendor’s claim.

Class code and payroll split

Workers’ comp rates differ by orders of magnitude between classes. In Ohio, from July 1, 2026, the base rate is $5.7709 per $100 of payroll for roofing (5551) and $0.0466 for clerical office employees (8810)⁠3.

Official workers’ compensation base rates for this work in the three state-fund states that publish them
StateClassDescriptionBase rateEffective
Ohio5551ROOFING – ALL KINDS AND DRIVERS$5.7709 per $1001 Jul 2026
Ohio8810CLERICAL OFFICE EMPLOYEES NOC$0.0466 per $1001 Jul 2026

Base rates set by the state fund before experience modification. Ohio and Wyoming charge per $100 of payroll; Washington charges per hour worked, and part is withheld from wages. Other states’ insurers file their own rates; see where rates are published.

Ohio’s classification rule treats clerical office employees (8810) as a standard exception to the governing classification⁠4. Two rules decide money:

  1. Keep time records

    An employee who works in two classes can be split only on actual payroll records; “Estimated or percentage allocation of payroll is not permitted”, and without records the whole payroll goes to the highest-rated class⁠4.

  2. Check the governing class

    The rule’s own example has 8810 payroll of $75,000 above drywall payroll of $50,000, yet the governing class is still the drywall code 5445⁠4. Having more office payroll does not make you a clerical risk.

Errors run both ways: NCCI’s class-inspection research ranked storage warehouse code 8292 first among reclassified codes in 2023: more than 60% of inspected policies with 8292 as governing class changed class, and over 75% of those moved to a mercantile code⁠6. NCCI will inspect for a fee when a policyholder wants to confirm a classification or resolve a disagreement⁠5. Ask for the inspection when the class difference is large relative to the fee.

Experience mod: what moves it

Your mod compares actual with expected losses over usually the latest three years of data; below 1.00 is a credit, above 1.00 a debit⁠1. Two mechanics matter for action:

  • Medical-only claims count 30%. The NCCI plan “includes only 30% of the actual primary and excess portions of an individual medical-only claim”⁠1. A small claim that stays medical-only weighs far less than one that becomes lost-time.
  • The window is long. One bad year affects three annual mods, so the benefit of a safer year arrives gradually.

In Ohio the experience-rated employer’s rate is its EM times the base rate for each class⁠2. Our calculation, using the Ohio roofing rate above on $200,000 of payroll:

Effect of a 0.20 swing in the mod, Ohio class 5551 (our calculation)
Mod Premium on $200,000 payroll
1.10 $12,695.98
1.00 (base) $11,541.80
0.90 $10,387.62

The gap between 0.90 and 1.10 is $2,308.36 a year on this one class, before any program discount. Details of the formula are in /guides/experience-modification-rate/.

We could not retrieve NCCI or WCIRB research on return-to-work programs for this page, so no claim about their effect on mods is made here.

State credits for safety and drug-free programs

Some states file a specific credit.

  • Florida. Statute requires approved workers’ comp rating plans to give “specific identifiable consideration” to employers with a drug-free workplace program, a safety program, or both, and insurers must tell the employer about the discount at quote and at each renewal⁠7. The state’s Division of Workers’ Compensation says employers are “eligible to receive up to a 5% premium credit on a qualified program”⁠8.
  • Wyoming. The state fund lists a Drug-Free Workplace discount of 10%, a Safety Discount Program of 3.33% to 10%, and an OSHA consultation discount of 3% to 10% for three years, plus a deductible program⁠9.

Illustration (our calculation, assuming the percentage applies to the whole base premium, which we have not confirmed): on a $10,000 Wyoming base premium, 10% is $1,000. We did not find whether the Wyoming discounts combine.

Group and retrospective programs

Washington L&I describes Retro as “a safety incentive program” open to any employer with an account in good standing, as an individual business or in a group; a coverage period lasts 12 months and can start in any calendar quarter⁠10. If the retro premium is below standard premium you may get a partial refund; if it is higher, “it could result in your having to pay an additional amount (assessment)”⁠10. That is a bet on your claims, not a discount.

We could not retrieve the Ohio BWC’s group-rating, group-retrospective, Safety Council or Drug-Free Safety Program terms, so none are quoted.

Deductibles and retentions

California’s insurance department states that the deductible “will be calculated in the rate” and that “the higher the deductible … the lower the rate”⁠11. The credit is only a price for taking on loss: you pay the first dollars of every covered claim, so a high deductible suits a business that can fund several claims in a year. Wyoming’s fund offers a deductible program of its own⁠9. State rules for workers’ comp deductibles differ and we did not verify them for this page.

Subcontractor proof of coverage

Workers’ comp is audited after the policy ends. In an Alaska Division of Insurance proposed decision (July 2022), a contractor’s subcontractor gave no proof of workers’ comp coverage, and the insurer added the subcontractor’s payments to payroll in the final audit; the decision upheld the audit under NCCI Basic Manual Rule 2-H⁠12. The insurer’s representative argued that Rule 2-H-2 bases premium “on the degree of documentation provided” and that, without payroll records, “the full subcontract price was the basis”⁠12. Collect proof of coverage before the subcontractor starts, and again at each renewal date it shows.

What we left out, and why

Pay-in-full discounts and installment fees, businessowners policy bundling and its eligibility limits, and fleet telematics credits are real pricing features, but we found no regulator or filed-program source we could open on 13 October 2026. Vendor press releases give percentages that depend on the carrier, state and fleet, and are not reproduced.

Sources

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