Workers' comp quotes that are off by thousands of dollars lose you deals—or worse, lock you into unprofitable policies. Getting the fundamentals right upfront is what separates brokers who build a real book of business from those scrambling month to month.
Understand the Core Variables That Drive Price
Workers' compensation premiums depend on three things: payroll, classification codes, and loss history. A roofing contractor with $500K annual payroll might pay $15K–$25K per year, while an office administrative staff at the same payroll could be $3K–$5K. The difference? Risk exposure. Don't quote without pinning down the exact job classifications your prospect uses—even "roofer" splits into residential, commercial, and specialty work with vastly different rates.
Payroll is self-evident but easy to get wrong. Always ask for the past three years of actual reported payroll or current year-to-date figures. Estimates lead to mid-year adjustments and unhappy clients.
Gather Detailed Information Before Running Numbers
Before you pull a quote, collect this information from the prospect:
- Current payroll by classification (past 12 months, broken down by job title)
- Experience modification rate (EMR) if they've had a policy before—this single number can swing a quote by 20–40%
- Loss history (number and severity of claims in the past three to five years)
- Workplace safety practices (equipment, training programs, documented safety protocols)
- State of operation (some states like California and New York run higher baseline rates)
A prospect without an EMR on file is a new or very small business. That's simpler to quote but typically more expensive per employee since you lack loss data. An established business with a good EMR can save 10–30% off the standard rate, while a poor one faces surcharges of 25–50%.
Use Standard Rates and Mod Tables Correctly
Most states publish Workers' Compensation Insurance Rating Bureau (WCIRB) or equivalent databases with manual rates by classification code. These are your anchor. A classification code like 5045 (office clerical) might have a base rate of $0.18 per $100 of payroll in your state, while 5474 (roofer—residential) could be $4.50+ per $100.
Always verify which year's rates you're using. States update rates annually, sometimes mid-year. Quoting off last year's manual when new rates hit can throw your numbers off by 5–15%, especially in high-change classifications like construction and manufacturing.
Multiply the base rate by the EMR, then by the expected payroll, and divide by 100. If it looks wrong—too high or too low compared to the prospect's current policy—ask why. Frequently, a classification change or business expansion explains the jump.
Account for Audit and Adjustment Risk
Workers' comp policies audit payroll at year-end. If a client underestimates payroll, the actual premium can climb significantly. Build this into your conversation: be honest that the quote assumes the payroll figures they gave you. A contractor expecting $400K in payroll who actually hits $550K will owe an additional premium, sometimes $5K–$10K depending on classification.
This protects you credibility-wise and sets realistic expectations.
Incorporate Safety and Loss Prevention Credits
Many insurers offer 5–15% discounts for documented safety programs, certifications (OSHA 30, safety director on staff), or classes attended. Ask about these specifically. For a contracting business, this can translate to $1K–$3K in annual savings—real money that makes your quote competitive without cutting into margins.
Present the Quote Professionally
Don't just send a number. Include:
- The classification codes used and why
- The EMR applied and any pending adjustments
- The assumed annual payroll and how you derived it
- Premium breakdown (base rate, mod, adjustable vs. standard)
- Validity period (quotes expire after 30–60 days)
- Next steps: when policies bind, when coverage starts, what documents are needed
Transparency here builds trust and reduces back-and-forth emails.
Frequently Asked Questions
Q: How much does an EMR change a quote? An EMR of 0.75 reduces your premium by 25%; an EMR of 1.25 increases it by 25%. A contractor with a good loss history can save thousands yearly compared to a business with frequent claims.
Q: What if a prospect won't give me exact payroll figures? Use their estimate but note it clearly as estimated in your quote and mention the policy will be audited at year-end. Request they provide actual figures before binding.
Q: Can I quote without knowing their classification code? Never. A single business might operate under two or three codes; guessing the wrong one skews your quote by hundreds or thousands of dollars and damages your credibility.
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