How is a workers' comp premium calculated?

The base formula is (annual payroll / 100) x class-code rate x experience modifier. Payroll is divided into 100-dollar units, multiplied by the rate set for that job's risk class, then adjusted by your company's claims history.

What is an experience modifier?

The experience modification factor (ex-mod) compares your past claims to the average for your industry. A mod of 1.00 is average, below 1.00 lowers your premium for a good safety record, and above 1.00 raises it after costly claims.

Is workers' comp required in Texas?

Texas is the only state where private employers can legally opt out of workers' compensation insurance. Most still carry it, but non-subscribers must meet reporting rules and lose certain liability protections.

Where do I find my class code rate?

Class-code base rates are published by the carrier and regulated by the Texas Department of Insurance. Office and clerical codes carry low rates; roofing, trucking, and construction codes carry much higher rates.

Does this include discounts and surcharges?

No. The estimate covers manual premium, the ex-mod, and an optional schedule credit/debit field. Real bills may add expense constants, premium discounts for size, terrorism charges, and assessments that vary by carrier.

Texas Workers' Compensation Premium Calculator

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Workers’ compensation insurance pays for medical care and lost wages when an employee is hurt on the job, and the premium an employer pays is driven almost entirely by payroll, job risk class, and claims history. This calculator estimates your annual Texas premium using the standard rating formula so you can budget and compare carrier quotes.

How it works

Premiums are built up from three core inputs:

Payroll units. Your total annual payroll for a classification is divided by 100, because rates are quoted per $100 of payroll.
Class-code base rate. Each job is assigned a classification code with a rate reflecting its injury risk — low for clerical work, high for roofing or trucking.
Experience modifier. Your manual premium (payroll units x rate) is multiplied by your experience modification factor. A factor below 1.00 rewards a strong safety record; above 1.00 penalises a claim-heavy history.

The formula is: manual premium = (payroll / 100) x rate, then modified premium = manual premium x ex-mod. An optional schedule credit or debit applies a final percentage adjustment.

Texas notes and example

Texas is unique: it is the only state where workers’ compensation is optional for private employers. Companies that carry it follow the same payroll-times-rate-times-mod math used nationwide, with rates filed under the Texas Department of Insurance.

For example, a contractor with $500,000 of payroll in a class rated at $8.50 per 100 has a manual premium of 5,000 x 8.50 = $42,500. With a safety-driven ex-mod of 0.85, the modified premium drops to about $36,125. Final bills may add expense constants, size discounts, and state assessments not modelled here.