When it comes to running a company, there are many things that you need to look into. Essentially, you need to secure the right insurance plans for your company. When there are employees who are working for your company, you need to make sure that you also have proper workers’ compensation insurance. The majority of states these days require companies to get this type of insurance. It has become a requirement because work accidents can happen any time. In association with workers’ compensation insurance, you have to be aware of your EMR rating too. Your EMR rating is crucial to this type of insurance plan. In this article, you will learn more about EMR rating, its importance, and how you can lower it. Getting a low EMR rating is vital if you want to lower your insurance premiums.
The acronym EMR stands for experience modification rating. It also goes by the name of MOD factor or rating. This rating is utilized to provide a price for the premiums of workers’ compensation insurance. For third parties to get an idea of future risks that your company may be dealing, they take the time to look at your history.
The construction industry is one such example wherein the insurance companies will consider your EMR rating to know how much you paid for injuries among employees and what risks you may have ahead of you. So far, 1.0 is the average EMR rating. Getting a company EMR rating that is lower than this number implies that your company is in a safer position than most. Essentially, you get to pay for lower premiums for your workers’ compensation insurance.
Now if your company gets an EMR rating that is beyond 1.0, your company will be deemed a riskier one. It becomes harder for you to get bids on specific projects. If you get a higher EMR score, this also implies that you will pay for a higher insurance premium. If your EMR score is above 1.0, you have a debit factor right there.
There are calculations that must be followed for you to know your EMR rating. To compute your EMR score, you have to consider your workers’ insurance compensation claims and actual insurance. All of these things are reported by the National Council on Compensation Insurance or NCCI. They essentially utilize the report from the past three years from the duration of 5 years that these pieces of information are collected. The use of an EMR worksheet is a must to assess each claim. Such a worksheet considers many factors with the likes of the type of incidents and the monetary value. Your payroll size is another factor that will help determine your EMR score. You may compare your EMR score to the 1.0 industry average and always keep in mind that any rating above it is high. Comparing your performance yourself can also help you a lot.