Workers CompensationQuestion 497 of 531
A contractor has $400,000 of payroll in a class code rated at $2.50 per $100 of payroll and an experience modification factor of 0.90. Before other adjustments, the premium is:
a.$3,600
b.$10,000
c.$9,000
d.$11,000
Explanation
Compensation premium starts with payroll divided by 100 times the class rate: 4,000 units at $2.50 is a manual premium of $10,000. The experience modification then applies, so $10,000 times 0.90 is $9,000. The $10,000 figure ignores the credit mod, $11,000 treats a 0.90 mod as a ten percent surcharge, and $3,600 leaves the class rate out of the calculation entirely.
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