Guaranteed Cost

Workers Compensation Insurance

Guaranteed Cost insurance rating plans are the most commonly used rating plans for workers’ compensation. A Guaranteed Cost rating plan may be appropriate for any insured regardless of premium size. In fact, this type of program may be an insured's only option, especially for smaller insureds.

In a Guaranteed Cost program, the billed premium is determined at the beginning of the policy period and is not subject to adjustment as a result of loss experience. The policy is rated using the manual rates, adjusted by a loss cost multiplier and an experience modification. The adjusted rate is then multiplied by payroll. The only adjustment to the original billed premium is at expiration. A final audit of the actual payroll versus the original estimated amount is completed at that time.