Hunter Nelson explains the difference between workers' compensation for W-2 employees and occupational accident insurance for 1099 truckers. Workers' comp premiums depend on your EMOD, payroll, and class code, while occupational accident typically costs around $120 a month per driver and covers independent contractors.
Questions this video answers
April 18, 2025
EMOD (experience modifier), payroll, and class code.
Baseline EMOD is 1.0; 0.6 indicates ~40% safer than industry average, 1.6 indicates ~60% more risky than industry average.
Example: $100,000 payroll with a 5% class rate → $5,000 before EMOD; with EMOD=2 → $10,000.
Ohio and North Dakota (speaker said there are four monopolistic states).
Chapters
Hey guys, I'm Hunter with Nelson Insurance. I'm going to be going over workers comp and occupational accident today. Let's get into it. All right, so let's just start off with the difference here between occupational accident and worker's comp. OCAC and work comp is what they are commonly referred to. Mainly it comes down to two big things. Is the employee that is actually an employee W2 or is your driver a independent contractor? 1099. Right. If they are 1099, you cannot put them under workers comp. Workers comp is only for W2 actually employees occupational action, which is very similar in the coverages and how things work there is for 1099 certified contractors. So you can have both policies, but that is how it works. If you're looking at the workers comp section, it is going to be based off of two things. They're going to. I should say this, the insurance company is going to rate you based off of two things. A workers comp is a very simple math problem on what your premium is going to be. So it's very nice. Your workers comp is going to be based off of your emod. I'm sorry, it's three things. Your emod, your payroll and your class code. Okay, so let's, let's talk about what those means. An EMOD if you are starting out is one and an EMOD is almost like a credit score for work comp. And it has nothing to do with credit. But it's going to be a comparison of how your business is run, claims wise and safety wise compared to other people in the industry with the same class code as you. So if you're a 1, it means you are exactly average. If you're a 0.6, it means you're probably about 40% safer than everybody else in the industry. And, and if you're at 1.6, it means you're probably 60% more risky than everybody else in the industry. It means you turn in more claims. It means the claims are lasting longer because they're more hurt, the employees are more hurt, et cetera, et cetera. Okay, your payroll, pretty self explanatory. What do you pay your W2 employees per year? This does not include the owner's payroll unless the owner would want to be included on the workers comp. Typically the owners are not included and the last thing is your class code. This is almost like your rate for your policy. So if you are a long haul trucker, general freight, you would given a class code that describes long haul Trucker hauling general freight material. And let's say the insurance company gives you a probably 5% rate on that. Okay? So what that would mean is if you were paying $100,000 a year in payroll, they're going to take the hundred ousand times the 5% to be 5000 times your emod, which would be 1 if you're starting off so then you'd be paying $5000 a year. If your emod was 2, it'd be a hundred thousand times 5% would be 5000 times 2. You'd be paying $10,000 a unit. Work comp, same deal goes for if you're paying 0.6, if you're paying 3, or if your EMOD is 0.6 or 3, whatever the case is. So your EMOD makes a big difference. So keep your EMOD low. If you don't know how to do that, reach out to us or reach out to an agent or your agent and get your EMOD down because it is literally a massive discount if you're 1.5. It is very simple. It's cut and dry, don't turn in claims, run a safer operation. Workers comp. There's a lot of risk management material, okay? That is basically how workers comp works. On the rating side, if you are in four states, the states I believe are Ohio, North Dakota, There are four monopolistic states. You have to get your workers comp insurance through this state. It is only through their state. You cannot get it through an insurance company. Common insurance companies for workers comp on trucking are going to be PI Insurance. Biburg, Amerisafe is very good, Great west acuity or a lot of the major ones. There's some regionals, so like in the Midwest here there's RAS, SFM, etc. Etc. Okay? And yeah, there's a lot of those guys are going to be around the, you know, starting off maybe 5 to 7 rate. Once you have bids a little bit or if the company's a lot cheaper, you can get down to the threes very, very easily there, right? So that is what the workers comp looks like in that section or where to get coverage at. The last thing I want to mention there is what is some of the stuff workers comp covers, right? Workers comp itself has no limits. There's no million dollars in coverage on anything like that. Workers comp has no limit. It is just workers comp. Okay. Or it is just unlimited coverage basically for the limit of it. And then you're going to have a million dollar limit. On employer's liability. Okay, so let's say you got a trucker and he gets hurt, right? And it has to be on the job and it has to be somehow, you know, business related for a workers comp to come in. He worker's comp will pay out for that. Let's say something happens where, I don't know, you're hauling radioactive material and the driver can no longer have kids. Well, that's going to cause distress to his newly married wife who is just playing starting a family with them. Now the wife is going to go sue you or the owner, whoever, whoever's watching this video, they're going to go sue the owner. Well, the owner is going to be covered with the million dollars employer's liability. This is basically the effect of the workers comp claim. And so it will pay out for the damages, for the pain and suffering. Say, hey, I'm sorry, you can't start a family. Here's $500,000 from the employer's liability. Okay. Workers comp. Or that is. That's workers comp. Occupational accident is just very similar there. The rating on it is usually just like a certain dollar amount per driver per month. And that's about it. You'll be paying about 120 bucks a month per driver. So 1440 a year. There's no rating on what the driver looks like or any type of stuff. They don't care about payroll. It's per 1099 driver. Hey, we're going to cover this. Coverage is going to be less extensive than workers comp. But what's nice about it is it's really easy to rate. Well, if I bring on 10 people, I have no idea what I'm going to pay them. That'd be tough to, tough to calculate there with workers comp. Right. They're all 1099. I know that my insurance company charges 1440 a year per driver. Perfect. Let's get them added on and add on to the master work compote or the OC AC policy. Boom, they're covered. So yeah, I'll cack. Is going to cover a little bit less stuff on the front end. But it's got a couple of its own little deals like heck I want to save. And I've seen some that cover dental or some other stuff like that. It's a little package for the owner. Rappers coming on definitely does have limits to it. Unlike workers copy. And again, workers comp. Not employer's liability. Those two always come together and yeah. Yes, that's how occupational accident works. So if you guys have any questions on this, you guys are curious to know more about workers comp or occupational accident, feel free to reach out to me. I'm Hunter with Nelson Insurance. My contact information will be down in the bio below. Please like subscribe. I am trying to get information out there for truckers. So I'm just trying to help you guys out here because I know insurance is a big cost for truckers here and if I can at least provide knowledge, I don't care who you go with, but if I can provide some knowledge that can help you save some money or get out of a hairy claim, that's what I'm here for. So thanks for watching guys. Sa.
