What is Workers' Comp Mod Rate?
The Short Answer
Workers' Comp Mod Rate explained simply
The Workers' Comp Mod Rate, also known as the Experience Modification Rate (EMR), is a number that insurance companies use to figure out how much a business pays for workers' compensation insurance. It's based on how many claims a business has had in the past compared to other businesses in the same industry. If a business has fewer claims than average, its mod rate will be lower than 1.0, which means it pays less for insurance. If it has more claims, its mod rate will be higher than 1.0, leading to higher premiums. This rate is recalculated every year.
Real-World Example
The Construction Company Scenario
Let's say a construction company has an average workers' comp premium of $50,000 per year. If their Workers' Comp Mod Rate is 0.80, their actual premium would be $50,000 * 0.80 = $40,000. If their mod rate is 1.20, their premium would be $50,000 * 1.20 = $60,000. A lower mod rate saves the company money.
Why this matters
A good Workers' Comp Mod Rate shows that a business is safe and well-managed. This can make the business more attractive to buyers because it means lower operating costs. A high mod rate can be a red flag, signaling potential safety issues and higher expenses.
Buyers will look at your mod rate. A low rate shows you run a tight ship and care about safety. This translates to lower costs and a better deal for them.
Buyers will look at your mod rate. A low rate shows you run a tight ship and care about safety. This translates to lower costs and a better deal for them.
Need expert guidance?
Don't navigate the buying process alone. Connect with a verified expert to help you find and close the right deal.
