How is the manual premium calculated?

Prepare for the Certified Authority of Workers Compensation (CAWC) Exam with multiple choice questions and in-depth content. Each question comes with detailed explanations and helpful hints to ensure you are ready for your certification.

Multiple Choice

How is the manual premium calculated?

Explanation:
Manual premium is determined by the amount of payroll and the class code rate assigned to that payroll, with the rate expressed per $100 of payroll. To get the actual premium, you multiply the payroll by the class code rate and then divide by 100. This converts the per-$100 rate into the total premium for all payroll covered. The other ideas described do not compute the premium itself: using the product without dividing by 100 would assume the rate is per full dollar, which it is not; and the governing class code or the highest exposure are classification factors, not the calculation formula for the premium.

Manual premium is determined by the amount of payroll and the class code rate assigned to that payroll, with the rate expressed per $100 of payroll. To get the actual premium, you multiply the payroll by the class code rate and then divide by 100. This converts the per-$100 rate into the total premium for all payroll covered. The other ideas described do not compute the premium itself: using the product without dividing by 100 would assume the rate is per full dollar, which it is not; and the governing class code or the highest exposure are classification factors, not the calculation formula for the premium.

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