Roofing workers’ comp rates in Houston depend on how your payroll is classified, which insurer’s filed rate applies, your own claims history and the audit. The Texas Department of Insurance says the rates for individual classifications differ from one company to another. This post explains each driver and gives no rate, range or percentage.
Classification: where the payroll is assigned
The Texas Department of Insurance explains that Texas employers are assigned one or more classifications based on the type of business, and each employee’s payroll is then assigned to the appropriate classification. The department also says the Texas classifications may differ significantly from those used in other states because they are specific to Texas businesses.
For a Houston roofing company, that means the classification conversation is about what each person on payroll actually does. Roofing crews, estimators working in an office, and a driver who never leaves the yard are different exposures, and the way payroll is split between them is a choice you and your agent should be able to explain. The workers’ compensation costs for roofers post walks the same mechanics at the national level.
The insurer’s filed rate and why quotes differ
The department says a company may choose to base its rates on its own company-specific relativities filed by the company, or on loss costs filed by the National Council on Compensation Insurance, an advisory organization to the department. It adds that companies file a loss cost multiplier that contemplates other expenses, such as agents’ commissions, profits and taxes.
So two Houston roofers with the same classification and the same payroll can see different premiums, because the insurers behind the quotes filed different multipliers. The department’s own guide exists for that reason: it says the rate guide is published to assist you in comparison shopping for your workers’ compensation coverage. The department’s employer FAQ points to the same two starting places for buying a policy: the rate guide, or an insurance agent near you.
Real-World Scenario: Two Houston roofing companies run similar crews. One reports payroll by classification each quarter and tells its agent when a crew is added. The other reports nothing until the audit. Their rates may be the same on paper, but the first owner sees the premium move gradually during the term. The second owner sees it move all at once, after the work is done and the cash is spent.
Experience rating: your record against the class
After classification and rate, the department says an experience rating modifier that reflects the employer’s past loss history may be applied to the premium. The National Council on Compensation Insurance explains the idea in its experience rating material: experience rating recognizes the differences among qualifying employers with respect to safety and loss prevention by comparing individual employers with others in the same classification.
That council also says experience rating gives individual employers some influence over the premium they pay and provides an incentive to develop loss prevention and claims management programs. For a roofer, the levers you control are how fast injuries are reported, how the claim is managed and how quickly an injured worker returns. The Texas Department of Insurance says returning an injured employee to work can reduce business costs and workers’ compensation costs. The falls from height post explains why a single fall claim can dominate a loss record.
Schedule credits, deductibles and other rating options
The department says a schedule rating debit or credit may be applied depending on individual characteristics of the employer’s business that may not be reflected in the rate. It also says optional rating plans, such as deductibles or retrospective rating, are available to eligible insureds and may reduce premiums.
Those options are not free. A deductible shifts part of each claim back to your balance sheet, and retrospective rating ties the final premium to what your claims turn out to be. Ask the agent to explain, in writing, who pays what on a claim before you choose one.
Audit: the estimate meets the books
The Texas Basic Manual states that all workers’ compensation policies are subject to a final payroll audit that reflects the actual payroll and the actual premium developed on the policy in comparison to the estimated payroll and premium calculated when the policy was issued. The manual is the department’s published rulebook for the Texas policy.
The audit is where inaccurate classification or underreported payroll gets corrected, in either direction. Keep payroll records by person and by role, keep certificates for every subcontractor, and tell the agent about changes in crews when they happen. The audit is not the time to learn that a crew was never reported.
Subscriber or non-subscriber: a decision, not a rate
Texas is unusual because the rate question has a prior question. The Texas Department of Insurance says private employers can choose whether to provide workers’ compensation insurance coverage, and that it is not required in most cases. Employers that choose not to are known as non-subscribers.
That choice has consequences. The department’s employer FAQ says that except in cases of gross negligence resulting in a fatality, workers’ compensation coverage limits an employer’s liability if an employee sues the business for damages. The Texas Division of Workers’ Compensation also lists notices a non-subscriber must give, including posting a notice of no coverage in the workplace. Whether to subscribe is a decision for you, your attorney and your advisor, and it should be made before a crew is hurt. Roofing contracts also change the calculation, because a general contractor can ask for proof of coverage no matter what Texas allows; see what GCs require from roofing subs.
Debits, credits and what an owner can influence
The National Council on Compensation Insurance describes the direction of the adjustment in its experience rating material. In that material, an employer with better-than-average loss experience receives a credit, while an employer with worse-than-average experience carries a debit mod. It says the actual payroll and loss data of the individual employer is analyzed over a period of time and compared to similarly grouped employers.
A Houston roofing owner cannot change the past, but the record is not fixed. The material says experience rating is not the only pricing tool available to insurance providers, and that it promotes occupational health and safety by giving employers an incentive to develop loss prevention and claims management programs. In practice that means ask your agent to show you the claims that drive the modifier, and to tell you which of them are still open. An open claim that is managed well is a different conversation from one nobody is watching. The reduce claims post lists habits that support a better record.
Safety services the state and your insurer provide
The Texas Department of Insurance says insurance companies that provide workers’ compensation policies must provide accident prevention services to policyholders at no added cost. It lists the Division of Workers’ Compensation’s safety resources for employers, including a workplace safety training calendar, free safety and health publications, free online safety videos and a safety newsletter.
For a roofing company, those resources are worth asking about when the insurer is selected. Which services does the carrier provide, who calls on you, and does anyone visit the job site? A carrier that offers little loss control is worth a second question about what the lower price includes. Ask each carrier to describe its loss control visits in writing, and compare them alongside the premium, because a service you never use is not a saving. The OSHA fall protection post covers fall hazards as practices rather than figures, and it is a useful companion when you compare carriers.
What to confirm with your agent
- Which classifications are on the quote, and how is each employee’s payroll assigned to them?
- Which insurer’s filed rate is behind the quote, and do the other quotes use the same basis?
- What experience rating modifier applies, and what claims drive it?
- Are any schedule credits or debits applied, and for what reasons?
- If a deductible or retrospective plan is offered, who pays what on a claim?
- When is the audit, which records are needed, and what happens when payroll changes mid-term?
For the Texas picture beyond Houston, see the Texas state page, the workers’ compensation coverage page, the Texas cost guide and the roofing insurance hub. To talk through your own payroll, use the quote page. Sources: the Texas Department of Insurance rate guide, its non-subscriber page, the employer FAQ and the Texas Basic Manual. This post is general education, not legal or tax advice.