Workers Compensation Insurance Rating Bureau of California c a l i f o r n i a California Basic Underwriting Manual Effective January 1, 2015 CIRBCalifornia
This California Basic Underwriting Manual was developed by the Workers Compensation Insurance Rating Bureau of California for the convenience and guidance of its members and it does not bear the official approval of the California Department of Insurance and is not a regulation. An insurer must make an independent assessment regarding its use of this Manual based upon its particular needs and circumstances. 2014 Workers Compensation Insurance Rating Bureau of California. All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including, without limitation, photocopying and recording, or by any information storage or retrieval system without the prior written permission of the Workers Compensation Insurance Rating Bureau of California (WCIRB), unless such copying is expressly permitted in this copyright notice or by federal copyright law. Each WCIRB member company, including any registered third-party entities, (Company) is authorized to reproduce any part of this work solely for the following purposes in connection with the transaction of workers compensation insurance: (1) as necessary in connection with Company s required filings with the California Department of Insurance; (2) to incorporate portions of this work, as necessary, into Company manuals distributed at no charge only to Company employees; and (3) to the extent reasonably necessary for the training of Company personnel. Each Company and all agents and brokers licensed to transact workers compensation insurance in the state of California are authorized to physically reproduce any part of this work for issuance to a prospective or current policyholder upon request at no charge solely for the purpose of transacting workers compensation insurance and for no other purpose. This reproduction right does not include the right to make any part of this work available on any Web site or through any computer or electronic means for any purpose. Workers Compensation Insurance Rating Bureau of California, WCIRB, WCIRB California, WCIRB Online, X-Mod Direct, escad and the WCIRB California logo (WCIRB Marks) are registered trademarks or service marks of the WCIRB. WCIRB Marks may not be displayed or used in any manner without the WCIRB s prior written permission. Any permitted copying of this work must maintain any and all trademarks and/or service marks on all copies. To seek permission to use any of the WCIRB Marks or any copyrighted material, please contact the Workers Compensation Insurance Rating Bureau of California, 525 Market Street, Suite 800, San Francisco, California 94105-2767.
Memorandum Regarding the January 1, 2015 Revision to the California Basic Underwriting Manual The following revisions are effective January 1, 2015 and reflect the approved changes to the California Workers Compensation Uniform Statistical Reporting Plan 1995. Amendments Effective January 1, 2015 Part 3, Standard Classification System 1. Section III, General Classification Procedures, Rule 2, Single Enterprise, was amended for consistency. 2. Section IV, Special Industry Classification Procedures, Rule 6, Stores, Subrules f, g, and h, were amended for consistency. 3. Section V, Payroll Remuneration, Rule 1, Payroll Remuneration, Subrule j, Executive Officers, Subrule k, Partners, Subrule l, Individual Employers, and Subrule m, Members of a Limited Liability Company, were amended to adjust the minimum and maximum payroll limitations for executive officers, partners, individual employers, and members of a limited liability company to reflect wage inflation since the minimum and maximum payroll limitations were last amended in 2014. 4. Section VI, Classification Section, Rule 1, Organization of Classifications, Subrule a, Industry Groups, was amended to reflect the establishment of Automotive Industry as an Industry Group and for consistency. 5. Classification 3805(1), Aircraft Engine Mfg. or Rebuilding, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 6. Classification 7332, Ambulance Services, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 7. Classification 4511, Analytical or Testing Laboratories, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how related operations shall be classified. 8. Classification 7198(2), Armored Car Services, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 9. Classification 4740(2), Asphalt or Tar Distilling or Refining, was amended to clarify its intended application. 10. Classification 9181, Athletic Teams or Parks all players on the salary list of employer, whether regularly played or not, was amended to increase the payroll limitation for players from $109,200 to $111,800 per player per season to reflect wage inflation since the payroll limitation was last amended in 2014. 11. An Industry Group for the Automotive Industry was established to include the classifications listed below: Classification 2797(2), Automobile Body Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 3808, Automobile or Motorcycle Mfg. or Assembling, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Memorandum 1
Memorandum Classification 8393, Automobile or Automobile Truck Body and Fender Repairing and Painting, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 8391, Automobile or Automobile Truck Dealers, was amended to clarify its intended application. Classification 8748, Automobile or Automobile Truck Dealers, was amended to clarify its intended application. Classification 3821, Automobile or Automobile Truck Dismantling, was amended to clarify its intended application. Classification 3805(2), Automobile or Automobile Truck Engine Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 8387, Automobile or Automobile Truck Service Stations, was amended to (1) add a suffix to reflect the establishment of alternate wordings, (2) remove the restriction on division of payroll with Classification 8388, Rubber Tire Dealers, (3) clarify its intended application, and (4) specify how Classification 8387 is distinguished from other automotive industry classifications. Classification 8387(2), Automobile or Truck Oil and Fluid Replacement Service Facilities, was established as an alternate wording to Classifications 8387(1), Automobile or Truck Service Stations, and 8387(3), Automobile or Truck Washing Facilities, to apply to automobile or truck service facilities at which the operations solely include preventative maintenance and service operations. Classification 3828, Automobile or Automobile Truck Parts Rebuilding, was amended to clarify its intended application. Classification 9516(2), Automobile Radio and Telephone Installation, Service or Repair, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 8389, Automobile or Automobile Truck Repair Shops or Garages, was amended to remove the restriction on division of payroll with Classification 8388, Rubber Tire Dealers, clarify its intended application, and provide direction as to how related operations shall be classified. Classification 8392, Automobile or Automobile Truck Storage Garages or Parking Stations or Lots, was amended for clarity and consistency. Classification 7227, Automobile or Automobile Truck Towing, Roadside Assistance or Freeway Repair, was amended for clarity. Classification 8397, Automobile or Automobile Truck Transmission Repairing and Rebuilding, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 8387(3), Automobile or Truck Washing Facilities, was established as an alternate wording to Classifications 8387(1), Automobile or Truck Service Stations, and 8387(2), Automobile or Truck Oil and Fluid Replacement Service Facilities, to apply to facilities at which the operations include automobile or truck washing, waxing and polishing, and to employers that wash, wax and polish automobiles or trucks at customers locations. Classification 9522(3), Automobile Body Upholstering, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Memorandum 2
Memorandum Classification 3840, Automobile, Automobile Truck or Motorcycle Parts Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 8390, Automobile Van Conversion or Customizing, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 8324, Automobile Gasoline Stations, was amended to clarify its intended application. Classification 9501(3), Painting automobile or automobile truck bodies, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 2797(3), Recreational Vehicle Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. A cross-reference to Classification 8046, Stores automobile or truck parts or accessories, which is part of the Stores Industry Group, was established. Classification 8388, Rubber Tire Dealers, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 3815(2), Automobile Body Mfg. truck, trailer or bus bodies, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Classification 3815(1), Automobile Truck or Automobile Truck Trailer Mfg. or Assembling, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 12. Classification 9586, Barber Shops or Beauty Parlors, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 13. Classification 4512, Biomedical Research Laboratories, was amended to clarify its intended application, remove the general restriction on division of payroll, and provide direction as to how related operations shall be classified. 14. Classification 7605(1), Burglar Alarm and Security Alarm Systems Installation, Service or Repair, was amended to clarify its intended application and for consistency. 15. Classification 5146(1), Cabinet or Fixtures, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 16. Classifications 5403/5432, Carpentry, were amended to clarify its intended application and provide direction as to how related operations shall be classified. 17. Classification 9015(4), Churches all employees other than clergy, professional assistants, organists, members of choir or Clerical Office Employees, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 18. Classification 8840, Churches clergy, professional assistants, organists, or members of choir, was amended to clarify its intended application. 19. Classification 9101, Colleges or Schools private, was amended to provide direction as to how related operations shall be classified. 20. Classification 8868, Colleges or Schools private not automobile schools, was amended for consistency and provide direction as to how related operations shall be classified. Memorandum 3
Memorandum 21. Classification 5195, Communications Cabling, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 22. Classification 8859(1), Computer Programming or Software Development, was amended to clarify its intended application and remove the general restriction on division of payroll. 23. Classification 5214, Concrete or Cement Work, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 24. Classification 6325, Conduit Construction, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 25. Classification 5606, Contractors, was amended to eliminate the requirement for WCIRB approval, to clarify its intended application and provide direction as to how related operations shall be classified. 26. Classification 4244, Corrugated or Fibre Board Container Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. 27. Classification 9059, Day Care Centers, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 28. Classification 4692, Dental Laboratories, was amended to clarify its intended application and provide direction as to how related professions shall be classified. 29. Classification 7721(1), Detective or Patrol Agencies, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 30. Classification 4611, Drug, Medicine or Pharmaceutical Preparations Mfg., was amended to clarify its intended application, provide direction as to how a related operation shall be classified. 31. Classification 2589(1), Dry Cleaning or Laundry, was amended for clarity and consistency. 32. Classification 3570, Electric Appliance Mfg., was amended to include the manufacture of battery chargers and battery pack assemblies. 33. Classification 3724(2), Electrical Machinery or Auxillary Apparatus, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 34. Classifications 5190/5140, Electrical Wiring, were amended to clarify its intended application and provide direction as to how related operations shall be classified. 35. Classification 3179, Electrical Apparatus Mfg., was amended within the Electronics Industry Group, to include the manufacture of actuators. 36. Classification 1624(2), Excavation rock, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 37. Classification 7219(2), Express Companies, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 38. The Farms Industry Group was amended to correct the reference to Section IV, Special Industry Classification Procedures, Rule 3. 39. Classification 9403(1), Garbage, Ashes or Refuse Collecting, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 40. Classification 9424, Garbage, Ashes or Refuse Dump Operations, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 41. A cross-reference was established to indicate that Classification 8324, Gasoline Stations, is listed under the Automotive Industry Group. Memorandum 4
Memorandum 42. Classification 3146(1), Hardware Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. 43. Classification 8839, Dentists and Dental Surgeons, which is part of the Health and Human Services Industry Group, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how related operations shall be classified. 44. Classification 8827(1), Homemaker Services, which is part of the Health and Human Services Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 45. Classification 8852, Home Infusion Therapists, which is part of the Health and Human Services Industry Group, was amended for consistency. 46. Classification 8827(2), Public Health Nursing Associations, which is part of the Health and Human Services Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 47. Classification 8834, Physicians, which is part of the Health and Human Services Industry Group, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how related operations shall be classified. 48. Classification 8823, Residential Care Facilities for Children, which is part of the Health and Human Services Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 49. Classification 9085, Residential Care Facilities for the Developmentally Disabled, which is part of the Health and Human Services Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 50. Classification 3146(2), Heat Treating, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how related operations shall be classified. 51. Classification 8831(1), Hospitals veterinary, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 52. Classification 8859(2), Internet or Web-Based Application Development or Operation, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how related operations shall be classified. 53. Classification 9008, Janitorial Services, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 54. Classification 8831(3), Kennels, was amended to clarify its intended application and provide direction as to how a related operation shall be classified. 55. Classification 2585, Laundries N.O.C., was amended for clarity and consistency. 56. Classification 9015(5), Libraries all employees other than librarians, professional assistants or Clerical Office Employees, was amended to clarify its intended application and reference its companion Classification 8810(3), Libraries librarians or professional assistants. 57. Classification 8810(3), Libraries librarians or professional assistants, was amended to clarify its intended application, reference its companion Classification 9015(5), Libraries all employees other than librarians, professional assistants or Clerical Office Employees, and provide direction as to how related operations shall be classified. 58. Classification 3632, Machine Shops, was amended to clarify its intended application and provide direction as to how related operations shall be classified. Memorandum 5
Memorandum 59. Classification 3560(1), Machinery Mfg. commercial food processing equipment, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 60. Classification 3560(2), Machinery Mfg. industrial, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 61. Classification 3560(3), Machinery Mfg. material handling equipment, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 62. Classification 8800, Mailing or Addressing Companies, was amended to clarify its intended application and remove the general restriction on division of payroll. 63. Classification 3066(3), Aluminum Ware Mfg., which is part of the Metal Working Classifications Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 64. Classification 3066(4), Coppersmithing, which is part of the Metal Working Classifications Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 65. Classification 3066(1), Sheet Metal Products Mfg., which is part of the Metal Working Classifications Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 66. Classification 3724(1), Milwright Work, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 67. The Mining Industry Group was amended to correct the reference to Section IV, Special Industry Classification Procedures, Rule 4. 68. Classification 1122, Mining surface, within the Mining Industry Group, was amended to identify associated operations and include references to similar or related classifications. 69. Classification 2797(1), Mobile Home Mfg., was amended to clarify its intended application, remove the restriction regarding division of payroll and provide direction as to how related operations shall be classified. 70. Classification 9610, Motion Pictures production, was amended to increase the payroll limitation for actors, musicians, producers and the motion picture director from $109,200 to $111,800 per year per person to reflect wage inflation since the payroll limitation was last amended in 2014. 71. Classification 8810(4), Libraries public librarians or professional assistants, which is part of the Municipal, State or Other Public Agencies Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 72. Classification 8875(1), Public Colleges or Schools, which is part of the Municipal, State or Other Public Agencies Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 73. Classification 8838, Museums, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 74. Classification 3152(1), Nail, Tack or Rivet Mfg., was amended to clarify its intended application. 75. Classification 3152(2), Nut, Bolt or Screw Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. 76. A cross-reference was established to indicate that Classification 9501(3), Painting automobile or truck bodies, is listed under the Automotive Industry Group. Memorandum 6
Memorandum 77. Classification 9501(1), Painting shop only, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 78. Classification 4250(1), Paper Coating or Laminating, was amended to clarify its intended application and direct that conversion of paper into paper goods is classified as 4279(1), Paper Goods Mfg. 79. Classification 7198(1), Parcel Delivery Companies, was amended to clarify its intended application. 80. Classification 7721(2), Patrol or Guard Services, was amended to clarify its intended application. 81. Classification 9031, Pest Control, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 82. Classification 8350, Gasoline or Oil Dealers, which is part of the Petroleum Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 83. Classification 4740(3), Gasoline Recovery, which is part of the Petroleum Industry Group, was amended to clarify its intended application. 84. Classification 4740(1), Oil Refining, which is part of the Petroleum Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 85. Classification 4297(1), Electronic Prepress, which is part of the Printing, Publishing and Duplicating Industry Group, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how related operations shall be classified. 86. Classification 4297(2), Graphic Design, which is part of the Printing, Publishing and Duplicating Industry Group, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how a related operation shall be classified. 87. Classification 9011, Apartment or Condominium Complex Operation, which is part of the Property Management/Operation Industry Group, was amended to clarify its intended application, provide direction how related operations are classified and direct that non-resident employees engaged exclusively in the rental or leasing of property shall be classified as 8741, Real Estate Agencies. 88. Classification 9007, Apartment or Condominium Complex Operation for Seniors, which is part of the Property Management/Operation Industry Group, was amended to clarify its intended application, provide direction how related operations are classified and direct that non-residing employees engaged exclusively in the rental or leasing of property shall be classified as 8741, Real Estate Agencies. 89. Classification 9015(1), Building Operation N.O.C. all other employees, which is part of the Property Management/Operation Industry Group, was amended to clarify its intended application, provide direction regarding related classifications and direct that employees engaged exclusively in the rental or leasing of property shall be classified as 8741, Real Estate Agencies. 90. Classification 9009, Building Operation commercial properties all other employees, which is part of the Property Management/Operation Industry Group, was amended to clarify its intended application, provide direction regarding related classifications and direct that employees engaged exclusively in the rental or leasing of property shall be classified as 8741, Real Estate Agencies. 91. Classification 8740(2), Building Operation commercial properties property management supervisors, which is part of the Property Management/Operation Industry Group, was amended to clarify its intended application. 92. Classification 9010, Mobile Home Park Operation, which is part of the Property Management/Operation Industry Group, was amended to clarify its intended application, provide direction regarding related classifications and direct that non-residing employees engaged Memorandum 7
Memorandum exclusively in the rental or leasing of property to clients shall be classified as 8741, Real Estate Agencies. 93. Classification 8741, Real Estate Agencies, which is part of the Property Management/Operation Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 94. Classification 3612, Pump or Hydraulic Apparatus Mfg. or Repair, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 95. Classification 1624(1), Quarries, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 96. Classification 7610, Radio, Television or Commercial Broadcasting Stations all employees, was amended to increase the payroll limitation for players, entertainers or musicians from $109,200 to $111,800 per year per person to reflect wage inflation since the payroll limitation was last amended in 2014. 97. A cross-reference was established to indicate that Classification 2797(3), Recreational Vehicle Mfg., is listed under the Automotive Industry Group. 98. Classification 5225, Reinforcing Steel Installation, was amended to provide direction as to how related operations shall be classified. 99. Classification 9096, Residential Cleaning Services, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 100. Classification 9079(1), Restaurants or Taverns, was amended to clarify its intended application, remove the general restriction on division of payroll and provide direction as to how related operations shall be classified 101. Classifications 5552/5553, Roofing, were amended to clarify the intended application and provide direction as to how related operations shall be classified. 102. A cross-reference was established to indicate that Classification 8388, Rubber Tire Dealers, is listed under the Automotive Industry Group. 103. Classification 8847, Beverage Container Collection or Redemption, which is part of the Salvage Material Dealers Industry Group, was amended to direct that the curbside collection of recyclables, including beverage containers shall be classified as 9403(1), Garbage or Refuse Collecting. 104. Classification 8264(2), Bottle Dealers secondhand, which is part of the Salvage Material Dealers Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 105. Classification 8265(2), Junk Dealers N.O.C., which is part of the Salvage Material Dealers Industry Group, was amended for clarity. 106. Classification 8264(1), Paper Stock Dealers secondhand, which is part of the Salvage Material Dealers Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 107. Classification 8264(3), Rubber Stock Dealers secondhand, which is part of the Salvage Material Dealers Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 108. Classification 8103, Wiping Cloth or Rag Dealers, which is part of the Salvage Material Dealers Industry Group, was eliminated as this classification does not develop sufficient data to produce a statistically credible advisory pure premium rate. Memorandum 8
Memorandum 109. Classification 8264(4), Wiping Cloth or Rag Dealers including all laundry operations, which is part of the Salvage Material Dealers Industry Group, was established as an alternate wording to Classification 8264 for wiping cloth and rag dealers. 110. Classification 3152(3), Screw Machine Products Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. 111. Classification 5951, Serum, Anti-Toxin or Virus Mfg., was amended to clarify its intended application, provide direction as to how related operations shall be classified and for consistency. 112. Classification 5146(2), Sign Installation or Repair, which is part of the Sign Industry Group, was amended to provide direction as to how related operations shall be classified. 113. The Stores Industry Group was amended to correct the reference to Section IV, Special Industry Classification Procedures, Rule 5. 114. Classification 8046, Stores automobile accessories, which is part of the Stores Industry Group, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 115. Classification 7365, Taxicab Operations all employees, was amended to increase the minimum payroll from $30,500 to $31,300 per annum per taxicab to reflect wage inflation since the threshold was last amended in 2014. 116. Classification 9156, Theaters dance, opera and theater companies, was amended to increase the payroll limitation for performers and directors of performers from $109,200 to $111,800 per year per person to reflect wage inflation since the payroll limitation was last amended in 2014. 117. Classification 9151, Theaters music ensembles, was amended to increase the payroll limitation for performers and directors of performers from $109,200 to $111,800 per year per person to reflect wage inflation since the payroll limitation was last amended in 2014. 118. Classification 3099, Tool Mfg. N.O.C., was amended to clarify its intended application and provide direction as to how related operations shall be classified. 119. A cross-reference was established to indicate that Classification 3815(2), Truck Body Mfg., is listed under the Automotive Industry Group. 120. Classification 7219(1), Trucking Firms, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 121. A cross-reference was established to indicate that Classification 3815(1), Truck, Truck Trailer or Bus Mfg. or Assembling, is listed under the Automotive Industry Group. 122. Classification 3634, Valve Mfg., was amended to clarify its intended application and provide direction as to how related operations shall be classified. 123. Classification 8292, Warehouses general merchandise, was amended to clarify its intended application and provide direction as to how related operations shall be classified. 124. Classification 7721(3), Watchpersons or Guards, was eliminated as the operations described by this classification are assignable to Classification 7721(2), Security Guard or Patrol Services. Memorandum 9
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Table of Contents Part 1 General Provisions 5 Section I Effective Date 5 Section II Definitions 5 1. Anniversary Rating Date 5 2. Authorized Rates 5 3. Base Premium 5 4. Classification(s) 5 5. Employee 5 6. Employers Liability 5 7. Employers Liability Insurance 5 8. Estimated Annual Premium 5 9. Experience Modification 6 10. Experience Rating 6 11. Experience Rating Plan 6 12. Exposure 6 13. Interim Premium 6 14. Minimum Premium 6 15. Premium Adjustment Period 6 16. Pure Premium Rate 6 17. Rate(s) 6 18. Standard Classification(s) 6 19. Uniform Statistical Reporting Plan 6 20. WCIRB 6 21. Workers Compensation 6 22. Workers Compensation Insurance 7 Section III Policy Forms and Coverage 7 1. Approval by Insurance Commissioner 7 2. Conformity with Insurance Code and California Code of Regulations 7 3. Additional Interests 7 4. Other Classes of Insurance 7 5. The Contract 8 6. Excess of Statutory Benefits Prohibited 8 7. Waiver of Subrogation 8 8. Group Workers Compensation Insurance Procedure for Obtaining Approval 8 Section IV Disputes, Complaints and Requests for Action and Appeals 10 Part 2 Underwriting Procedure 11 Section I Premium Computation 11 1. Classification System 11 2. Premium 11 3. Terrorism Risk Insurance Act of 2002 as Amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 11 Section II Policy Period 11 1. Policy Period 11 2. Continuing Form Policy or Fixed-Term Policy Written for a Period in Excess of One Year and Sixteen Days 11 Section III Rates 12 Section IV Premium Collection 12 1. Deposit Premium 12 2. Interim Premium 12 i
Table of Contents 3. Final Audit Premium 12 Section V Cancellations 12 1. Premium Determination Cancellation by the Company 12 2. Premium Determination Cancellation by the Policyholder 13 3. Short Rate Cancellation Table 13 15 Section I Introduction 15 Section II Classification Terminology 15 1. All 15 2. Assembly or Assembling 15 3. Clerical Office Employee(s) 15 4. Companion Classification 15 5. Division of Payroll 15 6. General Exclusions 15 7. General Inclusions 15 8. Governing Classification 15 9. Highest Rated Classification 15 10. Including 16 11. Interchange of Labor 16 12. Location 16 13. Manufacturing or Mfg. 16 14. Miscellaneous Employee(s) 16 15. Multiple Enterprises 16 16. No or Not 16 17. N.O.C. 16 18. Or 17 19. Outside Salespersons 17 20. Payroll(s) 17 21. Physical Separation or Physically Separated 17 22. Remuneration 17 23. Salespersons Outside 17 24. Shall Be Separately Classified 17 25. Single Enterprise 17 26. Standard Exception(s) 17 27. Standard Exception Employees 17 Section III General Classification Procedures 18 1. Classification Description 18 2. Single Enterprise 19 3. Multiple Enterprises 19 4. Standard Exceptions 23 5. General Inclusions 25 6. General Exclusions 25 Section IV Special Industry Classification Procedures 26 1. Aircraft Operations 26 2. Construction or Erection Work 26 3. Electronic Products Design and Manufacturing 31 4. Farms 32 5. Mining 33 6. Stores 33 7. Wrecking or Demolition and Building Raising or Moving 36 ii
Table of Contents 8. Labor Contractors 37 Section V Payroll Remuneration 37 1. Payroll Remuneration 37 2. Payroll Records 43 3. Division of Single Employee s Payroll 43 4. Drivers and Their Helpers Payroll 44 Section VI Classification Section 45 1. Organization of Classifications 45 2. Classifications 46 Part 4 Rates 167 Section I Company Rates 167 iii
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Part 1 General Provisions Part 1 General Provisions Section I Effective Date The effective date of these rules and any change in these rules is the date established pursuant to the company s filing of this Manual, and any amendments thereto, with the Insurance Commissioner of the State of California. These rules and the company s rates, unless otherwise specifically provided in the company s rate filing, will be applied to all policies as of the first anniversary rating date which is on or after the specified effective date, but will not otherwise be available to outstanding policies. Section II Definitions The definitions set forth in this Section shall govern the construction and meaning of the terms and phrases used in this Manual. 1. Anniversary Rating Date The anniversary rating date of a policy will be controlled by the effective date of the preceding policy, except as noted below: a. Where the WCIRB has established an anniversary rating date for experience rating purposes, such date will govern. b. Where the preceding policy has lapsed, been cancelled or expired, and no policy issued for a period of ninety (90) days beyond such date of lapse, cancellation or expiration, the policy will be considered new business. Where successive lapses occur, this rule will be applied to the most recent date. 2. Authorized Rates The rates, rating plans and supplementary rate information filed with the Insurance Commissioner pursuant to Section 11735 of the California Insurance Code. 3. Base Premium The sum derived from the application of the company s rates to the remuneration or other basis of premium, excluding any premium charges arising from the Terrorism Risk Insurance Act of 2002 as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007. 4. Classification(s) A classification of occupations, employments, industries and businesses filed by the company with the Insurance Commissioner of the State of California. 5. Employee Every person in the service of an employer for whom the employer is obligated to provide workers compensation benefits. 6. Employers Liability Any liability, other than for workers compensation, imposed by the laws of the State of California upon an employer for damages on account of bodily injury to or death of employees arising out of and in the course of employment. 7. Employers Liability Insurance The insurance of employers liability when such insurance is incidental to, and written in connection with, the workers compensation insurance issued to and covering the same policyholder or policyholders. 8. Estimated Annual Premium The premium, based upon the best information available that will be earned during the policy period. 5
Part 1 General Provisions 9. Experience Modification The modification factor that is published by the WCIRB in accordance with the Experience Rating Plan and that is required to be applied to the policy premium. 10. Experience Rating A rating procedure found in the Experience Rating Plan that utilizes past payroll and loss experience of the employer to forecast future losses by measuring the employer s loss experience against the loss experience of employers in the same classification to produce a prospective premium credit, debit, or unity modification. 11. Experience Rating Plan The California Workers Compensation Experience Rating Plan 1995, approved by the Insurance Commissioner of the State of California, Title 10, California Code of Regulations, Section 2353.1. 12. Exposure The basis against which losses shall be compared or rates will be applied and, unless otherwise specified, shall mean payroll. 13. Interim Premium The premium that is earned or estimated to be earned during the premium adjustment period. 14. Minimum Premium The minimum sum for which the company will insure the employer. 15. Premium Adjustment Period The periodic interval (such as monthly, quarterly, semi-annually or annually) that will be used by the company for the purpose of determining, billing and collecting the premiums earned or estimated to be earned during each periodic interval which falls within the policy period. 16. Pure Premium Rate The loss cost per unit of exposure, including loss adjustment expense, for a standard classification approved by the Insurance Commissioner. 17. Rate(s) The cost of insurance per unit of exposure, prior to any application of individual risk variations based on loss or expense considerations applicable to an insurer s classification. (See also Authorized Rates.) 18. Standard Classification(s) A classification of occupations, employments, industries and businesses developed by the WCIRB, approved by the Insurance Commissioner, and contained in the Uniform Statistical Reporting Plan. 19. Uniform Statistical Reporting Plan The California Workers Compensation Uniform Statistical Reporting Plan 1995, approved by the Insurance Commissioner of the State of California, Title 10, California Code of Regulations, Section 2318.6. 20. WCIRB The Workers Compensation Insurance Rating Bureau of California, a rating organization licensed and designated by the Insurance Commissioner of the State of California in accordance with the provisions of Sections 11750 et seq., of the California Insurance Code. 21. Workers Compensation The obligation imposed upon an employer by the workers compensation laws of the State of California to pay the benefits prescribed by such laws. 6
Part 1 General Provisions 22. Workers Compensation Insurance Insurance for workers compensation liability and, except when otherwise stated, also refers to employers liability insurance. Section III Policy Forms and Coverage 1. Approval by Insurance Commissioner Workers compensation insurance shall be written only upon policy forms and appropriate endorsement forms approved by the Insurance Commissioner prior to any use thereof. Pursuant to Section 2218 of Title 10 of the California Code of Regulations, all workers compensation insurance policy and endorsement forms must be submitted in duplicate to the WCIRB for preliminary inspection. The WCIRB shall review the forms and submit to the Insurance Commissioner for final action those which have not been previously approved by the Commissioner as to substance and form. 2. Conformity with Insurance Code and California Code of Regulations Under no circumstances shall workers compensation insurance be written under any policy, binder or other contract except in conformity with California Insurance Code Sections 381, 382, 11657, 11658 and 11659 and with Article 7, Subchapter 2 (Sections 2252 to 2268, regarding limiting and restricting endorsements), and Article 9, Subchapter 3 (Sections 2500 to 2509, regarding dividends to policyholders), of Chapter 5, Title 10, California Code of Regulations. 3. Additional Interests As used in this paragraph, employer includes individual, partnership, association, corporation or other legal entity. Two or more employers may be named as the insureds in a single workers compensation policy only if their experience is combinable under the rules of the Experience Rating Plan or they share a joint liability to pay workers compensation to employees engaged in connection with the same work, and not otherwise. Other employers may be added by endorsement to a policy to insure them against their workers compensation liability arising in particular and described circumstances as to which the named insured (or all of the named insureds if more than one) and the additional insured have joint liability to pay workers compensation to employees engaged in the same work, or as permitted in Rule 4, Application of Experience Modification to Policies Covering Employee Leasing Arrangements, Section V, Application of Experience Modification, of the Experience Rating Plan, and not otherwise. 4. Other Classes of Insurance Except as provided for in Section 11590 of the California Insurance Code, workers compensation insurance or workers compensation insurance and employers liability insurance shall be provided in a separate policy, which shall not provide insurance of any other class or classes. The contract providing workers compensation insurance or workers compensation insurance and employers liability insurance shall not be amended or supplemented by endorsement, rider, or other contract or agreement to provide for the combination or inclusion therein of any other class or classes of insurance, nor shall workers compensation insurance or workers compensation insurance and employers liability insurance be added by endorsement, rider or supplemental contract to a policy providing any other class or classes of insurance. The following shall not be considered another class or classes of insurance: (a) insurance of liability of an employer to his employees and their dependents on account of bodily injuries to or death of employees arising out of and in the course of employment under a workers compensation law or under an employer s liability law or the common law of other sovereignties; (b) voluntary compensation insurance for maritime and other employments, which are not within the scope of the workers compensation law by requirement or election; or (c) insurance liability of an employer under the U.S. Longshore and Harbor Workers Compensation Act. 7
Part 1 General Provisions 5. The Contract Each policy issued must contain, in substance, the following provision: This policy, including all endorsements or riders forming a part thereof, constitutes the entire contract of insurance. No condition, provision, agreement, or understanding not set forth in the policy or in such endorsement or rider shall affect such contract or any rights, duties, or privileges arising therefrom. 6. Excess of Statutory Benefits Prohibited No workers compensation insurance policy shall be written to afford compensation or medical or surgical aid in excess of that required by the statutory provisions. 7. Waiver of Subrogation Any agreement tending to waive the company s right to subrogation must be set forth in the form of an endorsement to the policy. 8. Group Workers Compensation Insurance Procedure for Obtaining Approval a. An organization or association of employers may be insured as a group pursuant to the provisions of Sections 11656.5, 11656.6 and 11656.7 of the California Insurance Code if such organization or association files with the WCIRB the documents, statements and agreements required to be filed by Section 11656.6. Such documents, statements and agreements should be filed at least thirty (30) days prior to the effective date of the proposed group policy. b. Separate policies must be issued for each member of the group unless their experience is combinable pursuant to Rule 3, above, Additional Interests. Pursuant to Section 11656.7 of the California Insurance Code, each member of an organization insured under a group policy shall be treated as a single and separate entity as respects experience rating and standard classification assignments. c. Before any new group policy is issued, the insurer shall, not less than thirty (30) days prior to the effective date of the proposed group policy, file with the WCIRB: (1) All documents and statements required of the organization or association of employers by the provisions of California Insurance Code Section 11656.6 and California Code of Regulations, Title 10, Section 2508. (a) A copy of the articles of incorporation and bylaws (or agreement of association and rules and regulations), all certified by the custodian of the originals; (b) If the association has agreed to pay past due premium of individual group members, an agreement stating that the association and insurer agree to use dividends due for nonpayment of past due premiums, that the association will be responsible for past due premiums and a resolution of the governing board of the association authorizing the execution of the agreement; (c) An agreement confirming that all members of the association which are to be insured by the group insurance are engaged in a common trade or business and are members in good standing, and that the association will notify the insurer of any change in such status for the purpose of immediate elimination from participation in the group plan; (d) A statement from the association setting forth the association s reason for desiring group insurance; (e) A statement from the association undertaking to establish and maintain a safety committee which, by education or otherwise, will seek to reduce the incidence and severity of accidents. (f) A statement from the association certifying that no less than 75% of the regular membership of the association is engaged in a common trade or business and that such percentage of membership will be maintained during the time the group insurance is in force; and 8
Part 1 General Provisions (g) A statement certifying that no less than 75% of the regular members of the association and each member of the association to be insured by group insurance is engaged in a common trade or business as specified in one of the following: i. Fifty-one percent or more of the total payroll is developed under a single standard classification (the classification must be specified). ii. Fifty-one percent or more of the total payroll is developed under any combination of standard classifications applicable to agricultural enterprises. iii. Fifty-one percent or more of the total payroll is developed under any combination of standard classifications applicable to the building and construction industry. iv. Fifty-one percent or more of the total payroll is developed under any combination of standard classifications applicable to the transportation and warehousing industry. v. Fifty-one percent or more of the total payroll is developed under any combination of standard classifications applicable to the timber and lumber industry. vi. Fifty-one percent or more of the total payroll is developed under any combination of standard classifications applicable to public agencies providing industrial, domestic or agricultural water services. vii. Fifty-one percent or more of the total payroll is developed under any combination of standard classifications applicable to sheltered workshops and rehabilitation facilities licensed pursuant to California Labor Code Section 1191.5. viii. Fifty-one percent or more of the total payroll of manufacturing facilities as identified in Sectors 31 to 33, inclusive, of the North American Industry Classification System that is developed under any combination of standard classifications applicable to manufacturing concerns engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products. ix. Seventy-five percent or more of the total payroll is developed under the same two standard classifications (the two classifications must be specified). Fifty percent or more of the association s present members have been members for at least one year prior to the issuance of the group insurance policy. (2) A statement from the association designating the insurer providing the group insurance and the policy dates requested for group approval. (3) A membership list. (4) A request from the insurer for approval to provide group insurance that identifies the association and the policy period for which approval is being sought. (5) Verification from the insurer of all statements made by the association. (6) A detailed explanation from the insurer of the nature of the trade or business engaged in by prospective participants in the group policy and the insurer classifications to be used in the policy. (7) A statement from the insurer that it will promptly notify the WCIRB concerning any member that discontinues membership or does not maintain good standing in the association. (8) A statement from the insurer that it will not deliver the proposed group policy until it receives approval from the WCIRB. d. Before any renewal group policy is issued, the insurer shall, not less than thirty (30) days prior to the effective date of the proposed group policy, file with the WCIRB: (1) A statement from the association setting forth the name of the insurer providing group coverage and the policy dates requested for approval. (2) A statement from the association confirming that the safety committee is being maintained. (3) An updated membership list. 9