Workers Comp Blog

California High-Risk Workers Comp Insurance

If you have ever been called a “high-risk insured” by an insurance agent when shopping for California workers comp insurance quotes, you may have wondered what that means. In most cases, they are referring to your experience modification rate (EMR). This rate can have a direct effect on your workers comp premium which will determine what carriers will and will not write your coverage. Let’s take a look at what an EMR is, how it affects your workers comp policy, and what to do about it.

What is a High-Risked Insured?

As mentioned, being considered “high-risk” for California workers compensation is mainly determined by your EMR. An EMR (also known as Mod, EMod, and XMod) is an assigned number reflecting your loss or claim experience. This is used to compare your claim experience and payroll history to other businesses in your industry to see if your business is average. An EMR over 1.0 is considered high to most workers comp carriers, deeming that insured high-risk, while less than 1.0 is considered low or good. EMR is earned by the claims paid and reserved for a period of three years, giving business owners the chance to improve their EMR. 

How Does a High EMR Affect Your Workers Compensation Quotes?

Having a high risk EMR can have a direct effect on your workers comp premium. Your workers comp premium will be more expensive if you have a high EMR and similarly, on the other end, your premium will be more affordable if your EMR is low. High EMR’s could also deem you ineligible with certain carriers, thus limiting your options for workers comp quotes and, in some cases, may cause you to turn to “last-option” state carriers, such as State Fund in the state of California. Clients may also look at your EMR and determine that they do not want to work with you on a job because of the amount of claims you may have in your loss history, which could limit your job options and thus your workers comp budget. 

How Can You Improve Your High EMR?

It takes time to improve your EMR but it is, by no means, impossible. A large part in doing this is reducing the number of claims your business has. There are operations within your business that you can start right away to help with decreasing the chances of a claim arising, such as:
  1. Implementing safety training: Making sure your employees are knowledgeable about how to properly operate or perform their job is essential in reducing the likelihood of claims and lowering your EMR
  2. Developing a return-to-work program: This helps shows carriers that safety and health is of priority within your business  and can even assist in closing a claim
  3. Improving hiring practices: Claims tend to happen among employees so make sure you have a thorough screening process for your workers to ensure that they are qualified and practice safe habits. This will reduce your chances of a claim.

Understanding how the EMR is calculated will also help you be aware of those factors, like:

  1. Audit payroll: Be aware of your end of the year audit payroll, as this payroll will be deemed final and used in the calculation of your EM
  2. Class Codes: Make sure the class codes on your workers comp policy are accurate, as that will help determine the industry you will be placed in for comparison and will thus determine your EMR. It is also important to review that the payroll for each class code is accurat.
  3. EMR review: Conduct an annual review of your EMR and this will help you stay on track and be aware of where you’re business’s EMR stands

What Should Your Next Step Be?

As you can see, EMR’s are important when it comes to signing up and shopping for your next California workers comp insurance quote. Talk to a reputable agent who can help you with claim management and who specializes in high-risk workers compensation so that you can still have the best options for your workers comp quotes while you work on improving your EMR and your overall business. By adding an agent to your team who can help with these matters will give your business the optimum chance to thrive as a low-risk company!