In states governed by NCCI (National Council on Compensation Insurance), there are three key manuals:

1) Basic Manual

This is the manual that contains information on the basics of workers' compensation. Here you will find the rules for classifying a business. What are the standard inclusions and exclusions for classifications? What money that is given to employees gets included or excluded from the workers' comp premium calculation? And so on.

Also of critical importance in the Basic Manual: What are the rules governing how classifications can be changed both during and after a policy period?

2) Experience Rating Plan Manual

The rules covering the experience modification factor are vast. This manual explains in detail each of the elements of the experience modification factor and how they are calculated. For instance, if you are going to cancel and rewrite a workers' comp policy, how can you know what policy periods will be included on an experience mod?

If one of your clients buys a business, what are the rules relating to their separate experience mods? (Hint: they are almost certainly required to be combined.)

Also in the Experience Rating Plan Manual are the rules relating to which businesses are required to have an experience mod and what changes can be made to the mod during the policy period.

3) Scopes® Manual

For all of the different types of business that exist, NCCI has defined just over 600 distinct classifications. This manual contains each of those classifications, spelled out in detail. As I mentioned in my March column, it is critically important that your client be classified correctly; otherwise, they are in grave danger of being overcharged and you are in grave danger of losing a client.

The Scopes ® Manual has a wider reach than the two manuals previously mentioned, as it covers 42 states and the District of Columbia. The exceptions are Wyoming, North Dakota, Michigan, Washington, Texas, Pennsylvania, New Jersey, and Delaware.

These manuals also include the exceptions for each of the states that are governed by NCCI, as well as several states with independent bureaus. These exceptions are critically important, and not knowing them can be costly.

As a simple example, the national rule is that pay for vacation time is included for workers' compensation premium determination. However, that's not the case in Kansas (provided you can document what portion of the payroll was paid during vacation time). As you can see, it's not hard for money to add up quickly for your client.

The NCCI manuals are available online and in print for a fee. However, in several states that publish their own manuals, they are available at no cost in PDF format.

These manuals provide the basis for all workers' compensation policies, and I've barely scratched the surface of the amount of information contained in those hundreds of pages. Without access to this information, it's impossible to know for sure if your clients are having the rules applied correctly to them or not. If you are not able to gain access to them, log in to your bureau's web site today and find out how.