Experience Modification Rating and How to Lower It

WHAT AN EXPERIENCE MOD IS

Your experience modification rating, or e-mod, is a multiplier applied to your base workers’ comp premium that reflects how your company’s actual claims history compares to other businesses doing the same type of work at a similar size. An e-mod of 1.0 is average for your classification code and payroll. Above 1.0 means your claims history is running worse than your peer group, so you pay a surcharge on top of the base rate. Below 1.0 means your history is better than average, so you get a discount. The system is standardized nationally through NCCI (or an equivalent state rating bureau in the handful of states that run their own), which is why the concept behaves consistently across state lines even though the underlying dollar amounts change.

WHY IT MATTERS MORE FOR EXCAVATION

Because excavation and grading crews carry higher-risk classification codes and higher base rates to begin with, a bad e-mod compounds against a larger number. A single severe claim, a trench-related injury, a struck-by incident involving heavy equipment, moves the needle more for an excavation contractor than an equivalent claim would for a lower-risk trade, simply because the base premium it’s multiplying is already bigger. According to the Insurance Information Institute, workers’ comp pricing is directly tied to claims experience, and few trades feel that connection as sharply as excavation does.

An elevated e-mod doesn’t just cost more on renewal, either. Many GCs and municipalities set a maximum acceptable e-mod (often 1.0 or lower) as a prequalification requirement before they’ll even let you bid certain jobs, particularly public infrastructure work. A high mod can quietly cost you bids you never even find out you lost because of it.

HOW TO LOWER IT OVER TIME

E-mod is a rolling calculation, generally built off your last three completed policy years (excluding the most recent one), which means it improves as clean years replace bad ones, but only if you actively manage what feeds it. A few things that move it in the right direction:

Run a documented safety program. Trench protection procedures, equipment operator training, and daily hazard checks aren’t just good practice, they reduce the frequency and severity of the claims that drive your mod up in the first place.

Get injured workers back to modified or light duty quickly when medically appropriate, instead of leaving them on full disability longer than necessary. Claims that stay open longer and pay out more in lost-time benefits hit your mod harder than the same injury handled with a fast, well-managed return-to-work plan.

Report and manage claims promptly and accurately. A claim that’s reported late or managed poorly can balloon in cost well beyond what the original incident warranted, and every dollar of incurred loss feeds directly into your mod calculation.

None of these are quick fixes, e-mod moves on a multi-year timeline by design. But a contractor who takes safety and claims management seriously for a few consecutive years typically sees it show up where it counts: a lower renewal premium and a wider list of jobs they’re even eligible to bid on.

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Related: What’s an Experience Mod and Why Does It Matter? · How Do I Lower My Workers’ Comp Premium Over Time?