Product Update

Contracting Classification Premium Adjustment Program Discussed in Construction Risk Management


This release of Construction Risk Management adds a new discussion of the Contracting Classification Premium Adjustment Program (CCPAP).

In 20 states, the CCPAP may present an opportunity for contractors paying above-average wages to earn a potentially significant workers compensation premium credit. The rationale behind the CCPAP is a perceived inequity between higher-wage-paying contractors and lower-wage-paying contractors. Because workers compensation insurance premiums are based on payroll, higher-paying contractors pay more for their insurance than lower-paying contractors simply because they pay a better wage.

The CCPAP generates credits worth tens of millions of dollars to insured contractors every year, but the impact of the credit could be even greater if all eligible contractors participated. Unfortunately, many do not apply for the credit because they do not know about it. Insurance agents and brokers can provide their clients a valuable service by investigating eligibility for this contractor premium credit. Given the relatively low thresholds for eligibility, it is likely that many more contractors would qualify.

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