Frequently Asked Questions for Policyholders

What is workers’ comp?

Workers' compensation is a system that pays lost-wage benefits and medical care to employees who become disabled because of an injury or illness related to their job.

What benefits are covered by workers’ compensation?

If an injury or illness is found to be job-related, the affected employee may be entitled to medical care for the injury or illness, disability payments for a portion of lost wages, rehabilitation services and, in the event of death, benefits payable to dependent survivors.

How much are workers' comp payments?

Benefits are calculated at 66 2/3 percent of the injured worker’s average weekly wage, not to exceed a maximum rate as set by state law. Workers’ compensation payments are tax-free.

What is an experience modifier?

Workers’ compensation premiums are based on the employer's estimated risk of loss. The estimated risk of loss is a function of the class of business in which the employer operates and the amount of the employer's payroll. Each class of business is assigned a manual rate for workers’ compensation coverage based on the principle that the more hazardous the employer's nature of business, the more likely its employees will incur a job-related injury. For example, a construction company is charged higher base rates than a florist. The components of premium are further defined as the manual rates by business class are applied per $100 of an employer's total payroll. The higher the employer's payroll, the more exposure there is for the insurer should the employer have to compensate for a loss of wages due to injury. A business with a relatively high payroll will pay higher premiums than one in the same class with a relatively low payroll.

Within each class of business, there is a differing risk of loss among employers depending on the emphasis each places on loss prevention and safety. An employer that consistently incurs injuries is a greater risk than one who is safety conscious and reduces injuries. The differing risk of loss between employers in a particular class code is quantified by a number called an experience modifier or “e-mod”. The experience modifier is a factor applied to the manual premium, shifting it up or down, depending on the insured's history of claims over the three years prior to the most recent year. For example, 2016 experience modifiers are based on years 2015, 2014 and 2013. The modifier changes yearly as it accounts for a new three-year period.

An employer's experience modifier represents its expected losses versus the expected losses of an average employer in the same class code. Taking into account a number of factors, the National Council on Compensation Insurance, or NCCI, determines expected loss rates by class code. These class-code benchmarks are applied to the individual employer's payroll and loss history, which, through a complex formula yields the experience modifier. The formula has a component that factors in and limits the effect of any large, single loss on the modifier. For more information on e-mods see our reference guide.

How does an experience modifier affect my rate?

If an employer's losses have been greater than the expected losses for its class code and payroll, its experience modifier will be greater than 1.00, resulting in a debit to the manual premium charged. If an employer's losses have been less than the expected losses, its experience modifier will be less than 1.00, resulting in a credit to the manual premium charged. Employers who are safety conscious and keep their employees healthy pay less for workers' compensation coverage.

What is loss control?

Loss control means reduction of an employer's exposure to workers' compensation losses through recognizing, evaluating and controlling preventable health and safety hazards to workers. See the Workplace Safety section of our website for more information.

What is a premium audit and why is it important?

The premium base for workers' compensation insurance is your business' payroll, referred to as remuneration. When a policy is written, the policy defines the premium as a certain rate per $100 of payroll for the policy period. Following the conclusion of the policy period, an audit is conducted to determine the actual payroll, or premium base, to compute the final earned premium. If the final earned premium is more than the initial premium you paid, you must pay the additional balance. If it is less, you receive a refund for the overpayment or a credit to any balance owed.

What is considered workers’ comp fraud?

Workers' compensation fraud is willful intent to withhold information or provide false information in an effort to obtain or defeat workers' compensation benefits. Fraud occurs in many forms. It includes an injured worker receiving benefits and not reporting wages from another job, for example, or a physician or health care provider billing for services not performed.

If the injured employee returns to modified duty, am I required to pay them their pre-injury wages?

No, but the insurer will likely have to pay a percentage of the difference between the pre-injury wage and the post-injury wage.