This Trick Saves Solar Contractors Thousands on Worker Comp | WIMC

May 22, 2025

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This Trick Saves Solar Contractors Thousands on Worker Comp

The solar energy industry has been growing exponentially in recent years, creating countless opportunities for contractors and workers alike. As the demand for renewable energy solutions increases, solar contractors are tasked with providing high-quality installations for both residential and commercial projects. While the benefits of working in such an exciting and ever-growing industry are apparent, solar contractors also face their fair share of challenges. One of the most significant challenges faced by solar contractors is managing worker’s compensation costs. Worker’s compensation, while crucial for protecting employees, can place a heavy financial burden on contractors. However, there is a trick that can help solar contractors save thousands of dollars on worker’s compensation premiums, which could have a significant impact on their bottom line.

In this blog, we will dive deep into the intricacies of worker's compensation, the challenges solar contractors face, and the trick that can lead to substantial savings for solar contractors.

Understanding Worker’s Compensation in the Solar Industry

Before delving into the trick that can save solar contractors thousands of dollars, it is important to first understand what worker’s compensation is and why it is so vital. Worker’s compensation is a type of insurance designed to provide financial benefits to employees who are injured or become ill while performing their job duties. This insurance covers medical expenses, lost wages, and rehabilitation costs, as well as providing benefits to the families of workers who are killed on the job.

For solar contractors, worker’s compensation can be particularly expensive. The nature of solar installation work can be physically demanding and, at times, dangerous. Workers climb roofs, handle heavy equipment, and work with electricity, all of which come with inherent risks. As a result, workers' compensation premiums for solar contractors are typically higher than those for contractors in other industries.

In fact, worker’s compensation costs are often one of the largest expenses that contractors face. For small businesses, this can be a significant financial strain, especially during times of slow business or when taking on new employees. As a result, many solar contractors are constantly on the lookout for ways to reduce these costs without compromising the safety and well-being of their workers.

The Trick That Saves Solar Contractors Thousands on Worker Comp

Now that we have a better understanding of the role worker’s compensation plays in the solar industry, let’s explore the trick that can help solar contractors save substantial amounts of money. This trick is centered around a strategy known as “class code optimization”.

Class codes are assigned by the National Council on Compensation Insurance (NCCI) or other state rating bureaus to help determine the risk profile of various industries and job functions. Each industry and job function is categorized under a specific code, which is used by insurance companies to calculate premiums for worker’s compensation policies.

In the case of solar contractors, the industry is typically classified under a high-risk class code due to the physical demands of the work. However, many solar contractors are unaware that they may be eligible for a lower class code based on the specific type of work they are performing. This is where the opportunity for savings lies.

Solar contractors can often benefit from reclassifying their work to a lower-risk category. For example, if a solar contractor specializes in installing solar panels on residential rooftops, their work may be classified under a more general construction code, which typically carries higher premiums. However, if the contractor primarily focuses on installing solar panels on commercial buildings or ground-mounted solar systems, they may be eligible for a lower-risk class code, which would result in lower premiums.

In addition to the type of work being performed, the size and complexity of the project can also influence the class code. Solar contractors who take on smaller residential projects may be able to argue that their work is less hazardous than contractors handling larger commercial or industrial projects. By reclassifying their work, solar contractors can reduce their overall premiums and save thousands of dollars in the process.

How to Take Advantage of Class Code Optimization

While the idea of class code optimization sounds simple, it is important to approach this process strategically to ensure maximum savings. Here are a few steps solar contractors can take to take full advantage of this strategy:

1. Review Your Current Classification

The first step in the process is to review the classification your business is currently assigned. This can be done by reviewing your worker’s compensation policy and speaking with your insurance agent. Many contractors may be surprised to learn that their classification does not accurately reflect the work they do, which can lead to overpaying for coverage.

2. Understand the Class Codes for Solar Work

It is important for solar contractors to familiarize themselves with the various class codes that apply to solar work. Different types of solar installations, such as rooftop installations, ground-mounted systems, or solar panel repairs, may fall under different class codes. By understanding which class code is most appropriate for their specific work, solar contractors can advocate for a reclassification if necessary.

3. Work with an Experienced Insurance Agent

Navigating the world of worker’s compensation insurance can be complex, especially when it comes to class code optimization. Solar contractors should work closely with an experienced insurance agent who is familiar with the nuances of the solar industry. An experienced agent can help identify potential savings opportunities, negotiate with insurance companies, and ensure that the contractor is classified correctly.

4. Keep Detailed Records of Work

To support a request for reclassification, solar contractors should keep detailed records of the work they perform. This includes documenting the size and scope of each project, the types of installations, and the safety protocols in place. Detailed records can help demonstrate that the contractor’s work is lower risk than originally classified and provide evidence to support a lower class code.

5. Monitor and Adjust as Necessary

Once a reclassification is achieved, it is important for solar contractors to continue monitoring their worker’s compensation premiums and classifications. As the business grows and evolves, the type of work being performed may change, which could impact the classification. Regularly reviewing the classification and premium rates can help contractors identify any additional opportunities for savings.

The Impact of Worker’s Compensation Savings

By taking advantage of class code optimization and reducing worker’s compensation premiums, solar contractors can realize significant financial savings. These savings can have a profound impact on the overall profitability of a business, allowing contractors to reinvest in their operations, hire more workers, or expand their service offerings.

Additionally, reducing worker’s compensation premiums can help solar contractors remain competitive in an increasingly crowded market. By lowering overhead costs, contractors may be able to offer more competitive pricing, which could attract more customers and lead to increased business opportunities.

Perhaps most importantly, class code optimization allows contractors to maintain the necessary coverage to protect their workers without breaking the bank. Worker’s compensation is essential for ensuring the safety and well-being of employees, and reclassifying work to a lower-risk category allows contractors to balance safety with cost-efficiency.

Other Strategies to Save on Worker’s Compensation

While class code optimization is a powerful tool for saving on worker’s compensation costs, there are other strategies that solar contractors can employ to further reduce premiums. These strategies include:

1. Safety Programs and Training

Investing in comprehensive safety programs and worker training can help reduce workplace accidents and injuries, ultimately lowering the risk profile of a solar contractor’s business. By demonstrating a commitment to safety, contractors may be able to secure discounts on their worker’s compensation premiums.

2. Experience Modification Rate (EMR)

The EMR is a factor used by insurance companies to adjust worker’s compensation premiums based on the contractor’s past claims history. A lower EMR indicates fewer claims and a safer work environment, which can lead to lower premiums. Solar contractors can work to improve their EMR by minimizing accidents and claims, which will result in long-term savings on worker’s compensation.

3. Choose the Right Insurance Carrier

Not all insurance carriers offer the same rates or coverage options. Solar contractors should shop around and compare quotes from different carriers to ensure they are getting the best possible deal. Working with a broker who specializes in worker’s compensation for contractors can also help secure the most favorable terms.

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