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Workers’ Comp Rates and Coverage for Residential Construction

March 7, 2023

residential construction

If you have a residential construction business, you know you need insurance for workers’ compensation. But how much is the workers’ comp cost for construction businesses? Once you know the workers’ comp rates, you will be better equipped to make an educated decision about the commercial workers’ compensation insurance you need. So let’s talk about that for a minute.

What Is Workers' Compensation Insurance?

Construction workers’ comp insurance is designed to provide necessary benefits to any employee who was hurt on the job or became ill because of their job. Those workers’ compensation benefits include the following:

  • Medical expenses
  • Lost wages
  • Rehabilitation costs
  • Death benefits to families of the employee

How Much Is Workers’ Comp Insurance for Construction Businesses?

Workers’ comp rates vary greatly from state to state. However, the workers' comp national average (excluding California) in 2023 is 93¢ per $100 of payroll. This figure is down from 2022 when the national average (excluding California) for workers' comp was 97¢ per $100 of payroll.

Workers’ comp rates vary depending on several factors.

  • Industry and type of work performed (class code rates)
  • Number of employees
  • Payroll
  • Claims history (MOD rates)
  • State where the business operates

The cost of workers' comp rates for construction businesses varies from state to state. However, here is a quick baseline formula most insurers use to calculate workers' compensation premiums.

Class Code Rate x Payroll ÷ $100 x Experience Modifier = Premium

What Are the Construction Workers’ Comp Codes?

Workers’ comp rates are much higher for industries where employees are at a greater risk of being hurt, like the construction industry. Each job role within the construction industry will carry a different class code depending on the given role. The designated class code will depend on the job’s risk level.

The National Council on Compensation Insurance (NCCI) is considered the standard for setting the class codes for any given industry. Therefore, most states follow NCCI guidance when trying to determine their class code rates. The NCCI website has a Class Look-Up feature you can use to find the appropriate code.

What Is a PEO?

PEO is short for Professional Employer Organization. You can think of this as a full-service payroll outsourcing option. It is a form of co-employment that performs various employee administration tasks. The purpose of a PEO is to provide critical services to small businesses. PEOs can administrate payroll and facilitate workers' comp programs. They can also help construction businesses manage benefits, offer risk management services, and provide compliance assistance. Additionally, PEOs have trusted industry relationships that help small businesses with access to workers’ compensation at more affordable rates. Another aspect of using a PEO is that they can also manage your claims for you in the event of an incident. This will ensure your employees get the support they need when they need it.

What Are the Benefits of Using a PEO?

There are significant benefits to using a PEO for your construction business.

  • A PEO provides workers’ compensation coverage and claims management to leased or PEO employees on your behalf.
  • A PEO helps manage and lower your workers' compensation costs.
  • A PEO can help reduce your overhead costs and may help lower your benefit rates.
  • A PEO can provide payroll processing services.
  • A PEO can reduce your burden at tax time.
  • A PEO can provide construction-specific services (job costing, certified payroll processing, OCIP reporting).
  • A PEO can offer premium benefits packages
  • And more!

Why Choose SouthEast Personnel Leasing, Inc. as Your PEO?

SouthEast Personnel Leasing is not insurance; however, we have over 30 years of strong financial history and the demonstrated ability to cover claims. We also have strong relationships with our workers' compensation carriers that allow great flexibility and the ability to work with industries that many other PEOs simply can't.

Construction is a high-risk industry and you need someone on your side to help shoulder the burden. At SPLI, we provide core administrative support to your construction company. We have four areas of expertise, which are Workers’ Compensation, Payroll Administration, Employee Benefits, and Risk Management. Additionally, we have an in-house claims department that monitors all your vendors and providers for you. This helps to resolve claims efficiently and helps prevent costly mistakes.

Here are some of the other benefits of using SouthEast Personnel Leasing as your PEO.

  • It gives you time to serve more customers.
  • Helps mitigate liability.
  • Rest assured knowing your workers' comp comes through a Rated A by AM Best Insurer.
  • Eliminate stress because you no longer have to handle critical functions yourself.
  • You have a trusted partner to rely on.
  • Gain trusted expertise.
  • Secure needed coverage.

What’s Next?

If you want more information about using a PEO for your workers’ compensation administration and other personnel management services, please Contact SouthEast Personnel Leasing, Inc. today. We offer workers’ comp claim management and other personnel services, and quickly give you a quote, sometimes within 24 hours. We’d love to show you just how easy and cost-effective using our services can be.


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