There are many different insurance coverages that a contractor will need to review for a project. Such as builder’s risk insurance and general liability. Workers’ compensation insurance is usually the most expensive of the many coverages needed for a construction project reflected by your EMR. Most states require contractors to have coverage on their projects in order to protect employees from potential work-related injuries.
The cost of workers’ compensation insurance is different for each contractor, based on the level of risk that your insurance firm calculates. This calculation is known as the EMR, or the experience modification rating, and it is the measuring stick insurance firms look at to provide coverage to a contractor.
What is an EMR?
The experience modification rating is a calculation that insurance firms use to price the cost of workers’ compensation premiums. This rating reflects the contractors and a variety of indications, such as injury costs, claim history, and acts as a prediction of future risk. EMR may also be known as a Mod-Factor or Mod-Rating.
On average, an EMR is 1.0. This means that a contractor is found to be no more or less risky than the majority of other contractors. Typically, a rating under 1.0 is good and relatively safe. If your rating is above 1.0 it is considered riskier or not as good.
How do you calculate an EMR? It’s based on information and actual insurance claim history. Your insurance provider can calculate this number for you.
Why does your EMR matter?
It is a critical component when a contractor is competing for work in the construction industry. Some owners will only work with companies who attain an EMR scores below 1.0. This could be a make or break from winning a project or losing it. An EMR greatly impacts insurance premiums. The lower your EMR, the lower the premiums paid on work comp coverage. An EMR that’s below 1.0 means it will save you money in the long run, especially on insurance premiums.
Tips to Lower Your EMR
The best way to reduce insurance premiums associated with work comp is for contractors to reduce their EMR. The best way to complete this is by providing a safe work environment for your employees. Here are some ways to ensure a safe work environment and lower your EMR.
- Build a Safety Culture. Once this is completed, work towards continuous improvement by reviewing your leading and lagging indicators.
- Track Key Indicators. These predictive metrics focus on continuous improvement. Lagging indicators look at past statistics and data that has previously occurred.
- Invest in Safety Technology. This will help you to track what courses your employees have taken and ensure that they are up-to-date on their training. Training is key to a safe environment.
Ultimately, the goal is to create a safe environment and prevent injuries on the job. The safer that you and your employees perform, the lower your EMR and less expensive your insurance premiums will be. For more information on this topic, contact your local insurance experts here at IBC Insurance. Give us a call at 712-277-2424 or fill out this form online. We look forward to serving you!
