Mechanic Workers’ Comp Code: A Guide for Auto Shops

What are Class Codes and why are they important?

If you own or manage a mechanic shop, you’ve probably come across the term “class codes” when dealing with workers' compensation insurance. Class codes are four-digit numbers that reference different job categories across industries, including automotive.

Think of class codes as identifiers that help insurers quickly determine the risk associated with each job role. The National Council on Compensation Insurance (NCCI) assigns and maintains these codes and description of the job roles.

In mechanic and auto repair workers’ compensation, class codes serve three main purposes:

• Defining the Business: They specify the types of tasks performed in your shop.
• Estimating Risk: They indicate how risky each role is based on job duties.
• Setting Insurance Rates: They directly impact your insurance premium based on the job’s risk level.

How are Class Codes determined?

Each class code has 3 parts which the NCCI manages. 

1. Four-digit Class Code: A unique number assigned to specific job roles
2. Description: Details about the job role covered by the class code
3. Risk Rate: A number representing the likelihood of injuries or illnesses for that job

The risk rate is important because it helps insurance companies decide how risky it is to cover a specific job, which then affects how much your insurance will cost. While the class code and description usually stay the same, the risk rate can change every year. 

The NCCI looks at injury data from each industry in different states to update the risk rates. If there are more injuries in a year, the risk rate might go up, and if there are fewer injuries, it might go down.

Common Workers’ Comp Codes for Mechanics

Most auto repair shops and mechanic businesses use one or more of these key class codes:

Class Code 8380 | Automotive Repair and Service

This is the main code for general auto repair and maintenance. It applies to businesses performing a wide range of services, from basic tune-ups and oil changes to more specialized repairs like transmission work. It includes employees at service stations, gas stations, tire shops, muffler and brake repair, and even dealership service departments.

Mechanics, service writers, parts handlers, and other shop personnel generally fall under this classification. 

Class Code 8393 | Auto Body Repair

Class code 8393 covers businesses focused on body repair work. This includes tasks like fixing dents, painting, fiberglass repairs, and upholstering vehicle interiors. (Shops that exclusively handle painting tasks are usually classified under class code 9505.)

Class Code 7225 | Towing Services

If your business offers towing services, you’ll need to classify those employees separately under code 7225. Towing is considered a higher-risk job due to the hazards involved with roadside assistance, and the premium for towing employees reflects that. 

Kickstand Tip:

If your shop does both towing and repair work, it’s important to separate the payroll for each job type. This way, only employees who perform towing are classified under the higher-rate code, while other repair-only employees can remain under the more standard rate of code 8380.

State-Specific Mechanic Class Codes 

While most states follow NCCI guidelines, certain states have their own classifications. In Pennsylvania (PA) and Delaware (DE), for example, the standard Class Code 8380 for automotive repair services is replaced by a state-specific code, 0815. This variation applies to general auto repair, covering tasks like vehicle maintenance, tune-ups, and parts replacement.

Non-Industry Class Codes

Mechanic shops often have employees in roles that don’t involve hands-on vehicle work, like office and administrative positions. To save on workers’ comp costs, these employees should be classified under non-industry-specific codes. 

Class Code 8810, for example,  is used for office staff handling administrative tasks who don’t work in the repair area. 

Kickstand Tip:

Keep your office staff out of the shop! It’s essential that these employees stay in the office and avoid the shop floor. Even brief visits to the repair area could raise questions during audits and lead to a pricier classification.

How do Class Codes affect Insurance Rates?

Class codes help insurance companies assess the risks of specific jobs and set appropriate premium rates. Jobs with more risks, like towing, typically have higher premiums. 

Here's how some common codes compare:

• Class Code 8380 (Automotive Repair): Often has lower rates due to the controlled, in-shop environment.
• Class Code 8393 (Auto Body Repair): Slightly higher rate due to the additional risks of bodywork and exposure to chemicals.
• Class Code 7225 (Towing): Towing jobs have one of the highest rates due to roadside hazards.

Each state has its own rate for these codes based on local injury data and regulations, so it’s worth checking your specific state rates.

Automotive Repair (class code 8380) Rates per State 2024

The average workers' compensation rate for Class Code 8380 is $2.15

Auto Body Repair (class code 8393) Rates per State 2024

The average workers' compensation rate for Class Code 8393 is $1.54

Towing (class code 7225) Rates per State 2024

The average workers' compensation rate for Class Code 7225 is $6.79

Curious about how these rates translate into costs for your business? Check out this guide to Workers’ Comp for Mechanic Costs.  

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Tips to ensure your Class Codes are correct

Accurately classifying your employees is essential to ensure your shop has the right coverage and to avoid paying more than necessary. 

Here are a few tips to keep your classifications accurate:

• Check Job Duties: Regularly review each employee’s job description to ensure they’re assigned the correct class code based on their duties.
• Separate Office Staff: For office employees, ensure they’re only doing administrative work to stay under code 8810. Keeping them out of the repair area helps maintain the lower rate.
• Split Payroll for Dual Services: If your shop offers both auto repair and towing, split the payroll between codes 8380 (repair) and 7225 (towing) to reflect each role’s risk level.
• Consult with Your Agent: Work closely with your insurance agent to make sure class codes are accurate and avoid penalties for any misclassifications.

Get the right Coverage with accurate Class Codes

Choosing the correct workers’ comp class codes is crucial for cost savings and complete coverage. If you have questions about which code is right for your shop, get an instant quote to start a conversation with an agent. 

Or give us a call at 886-338-8823—we specialize in providing workers' comp coverage for mechanic shops and can help you find the best protection for your business and employees.