Workers’ compensation insurance is a critical component of all business insurance policies. What many business owners don’t know, however, is how the cost of their coverage is calculated. Why do some companies pay higher premiums than others? Part of it has to do with your ex mod rating. Here’s what you should know about ex mod and how it impacts your workers’ comp insurance cost.
What Is Ex Mod Insurance?
Also known as Experience Modification Rate, it is a score assigned to you by the Workers’ Compensation Rating Bureau that helps to determine the total cost of your workers’ compensation insurance. Simply put, it’s a factor that takes into account your previous claims history when calculating your premium.
How Does The Ex Mod Work?
As you can see on https://www.arroyoins.com, insurance companies calculate your premium by first multiplying your base rate which is your payroll per $100 by your industry classification rate. It will then multiply your base rate by your ex mod factor. If your claims history falls within the average range of others of your size and industry, you would receive a mod factor of 100. If your history is better, you may receive a factor of 90 or a 10% discount. A worse history may land you with a factor of 120, or a 20% higher premium.
When it comes to your workers’ compensation, it pays to have a positive history or even no history. A negative history can greatly impact your costs.