Category: Workers Compensation

Owning and operating a business can be very rewarding and potentially very profitable, but it can also be very expensive. Having inventory, property, taxes, and especially employees – it all comes with costs. But some of those costs can be controlled, is your workers’ compensation insurance one of them? Possibly so, and the source of control may be your experience modification factor (also known as experience mod rate, EMR, xmod, Mod, and more). Let’s review how.

Safety Programs

As you can read in another of our Blogs, your Mod is based on the comparison of your business to others in your industry. The average Mod is 1.0, so your business will be higher or lower depending on the circumstances. If you have a good business history with minimal and less severe claims, you will likely have a Mod lower than 1.0.

So, can you lower this Mod? Yes, and having a safety program in place is a great first step. To build one, take steps that include examining your risks, determining processes, deciding who is responsible for them, documenting the plan, and implementing/reviewing the plan and its results.

Your Data

Insurance companies are underwriting your coverage to predict future losses. They’ll review your company’s history and compare it to others in your industry. Making sure this data is accurate is critical. What are your employees’ roles, and are they classified properly. Is the industry you’re being compared with accurate to the work your company does? Do they understand your safety plan and the risk management measures you have in place. Work with your agent and the insurance company to be sure this information is complete and accurate.

Covering Investment Property Risks

What you actually need to cover investment property may still vary, but let’s start with the basics. Investment property, rental property, or even sometimes call landlord risk – these insurance policies are designed to cover you for losses to property you are renting out to others. Property damage, injuries, theft, and liability are all parts of this coverage you need to understand and know your limits for in the policy you have in place. You also need to keep in mind that while some coverages may be “bundled” into policies, there are often additional gaps to address. For example, sewer backup or flood insurance are unlikely to be included in these policies. Other considerations like loss of income or tenant rent default should also be discussed.

Claims Prevention

In addition to safety on-site, preventative measures can be taken before the job ever starts. Onboarding, training, screening, and testing of employees and potential hires can help you save.

In addition to safety, the above steps may help your company run more efficiently – which may lead to happier employees and higher profit margins. It’s a win-win!

Let us help you understand your Mod and the options you have to improve it! Contact Brandon Patterson at 865.453.1414 or email brandon@ownbyinsurance.com and let us help you get started.

You know you want to protect your employees, but sometimes the different options for covering them can be confusing. If an employee gets hurt at work, you want to have coverage in place to help them and also protect the interests of your business. As a result, you purchase a workers’ compensation policy that will help support you both should that happen. But then your insurance agent asks you about short-term and long-term disability insurance – why do you need those policies if you’re already covered? Let’s break it down.

Workers’ Compensation Coverage
Workers’ comp coverage will typically cover medical expenses of employees that get injured on the job doing tasks related to their role. It may also replace a portion of their wages while the miss work to recover from the incident. Other claims, such as training replacement staff, permanent injuries, and in the worst case – death benefits – may also be payable from workers’ comp.

However, these injuries have to be work-related. What happens if your employee is an accident outside of work that leaves them unable to perform the duties of their job? That’s where disability coverage may come into play.

Short-term Disability Coverage
If you have an employee that is injured – let’s say in a car accident as an example – and needs time to recover, a short-term disability policy may help pay them a percentage of their salary for a time determined by the policy. This is often for a term of weeks, months, or possibly a year. And while disability “insurance” from Social Security may be available, that only applies after a term of five full months of the disability has occurred.

Long-term Disability Coverage
As you might imagine, long-term disability typically has a greater amount of time that the policy will provide income replacement. While the amount and time period depends on the policy, some terms are as long as though retirement age.

In addition to policies through a business, some people decide to purchase individual disability policies. These may cover more income replacement, and/or may have longer terms of coverage. What’s right for your business and your employees? Get in touch with Brandon Patterson at our agency by calling 865.453.1414 or emailing kevin@ownbyinsurance.com to discuss your insurance options.

If you have a business with employees, you certainly want to protect them in case they get injured on the job. But workers’ compensation insurance can sometimes be confusing, especially when it comes to understanding how your rates are determined. There is a general formula we will discuss, but the unique characteristics and financials of your business play a key role. The following are the basics of what you need to know.

Your Payroll: The payroll for your business is the starting point for calculating your workers’ comp premiums. For every $100 of taxable wages you pay on payroll, you will be charged an amount for work comp coverage. What amount? Let’s take the next step to find out.

Your Employee Class Code/Rate: For every employee, there is a 4-digit class code assigned to work they perform. In Tennessee, the rates for those codes are determined by the National Council on Compensation Insurance (NCCI). In theory, the rate should correspond to the risk the employee has based on their job’s tasks. For example, an office worker may have a rate of $0.15, while a manufacturing worker may have a rate of $15.00.

Your Experience Modification Factor: Also known as an Experience Mod or just a Mod, this factor is based on the comparison of your business to others in your industry. How old is your business? How frequently have you had work comp claims? How severe are those claims? These are factors that will impact your Mod.

The average Mod is 1.0, so your business will be higher or lower depending on the circumstances. If you have a good business history with minimal and less severe claims, you will likely have a Mod lower than 1.0. For example, a 0.90 Mod would give your business a 10% credit. Conversely, a 1.10 Mod would add a 10% debit to your work comp rates. Other factors, like the Loss Cost Multiplier an insurance company applies to the rate, may also have an impact.

The Formula:  Class Code Rate X Experience Mod X (Payroll/100) = Rate Estimate

Workers’ comp can be a complicated coverage, but it doesn’t have to be. Contact Brandon Patterson in our office at 865.453.1414 or email brandon@ownbyinsurance.com to discuss your risks and options for coverage.