Risk classification is a method for grouping risks with similar characteristics to set insurance rates. Washington developed its own risk classification system that is based on the degree of hazard for each occupation or industry and tailored to Washington's businesses and industries.

There are more than 300 risk classifications used in Washington, reflecting a variety of different industries with different workers' compensation hazards. L&I assigns every employer one or more risk classifications based on the nature of their business. Each risk classification has separate base premium rates that apply to the employers and workers in that classification. As a result, employers and workers in more hazardous industries (more frequent and severe injuries, higher claims costs) generally have higher premium rates than employers and workers in less hazardous industries.