What’s an Experience Mod and Why Does It Matter?

HOW IT’S CALCULATED

E-mod is calculated using a formula standardized nationally through NCCI (or an equivalent state rating bureau in a handful of non-NCCI states), generally built off your last three completed policy years, excluding the most recent one. It compares your actual claims losses against the expected losses for a business of your size and classification code, which is why it’s a genuine apples-to-apples comparison against your peer group, not just a raw claims count.

WHY IT MATTERS BEYOND THE PREMIUM LINE

A high e-mod costs you twice. First, it directly increases your workers’ comp premium every year it stays elevated. Second, many general contractors and municipalities set a maximum e-mod, often 1.0 or lower, as a prequalification requirement before you’re even allowed to bid certain jobs, particularly public infrastructure work. That means a bad mod can cost you work you never find out you were disqualified from. Because excavation carries higher base rates to begin with, an elevated mod compounds against a bigger number than it would for a lower-risk trade, see Experience Modification Rating and How to Lower It for what actually moves it in the right direction.

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Related: Experience Modification Rating and How to Lower It · How Do I Lower My Workers’ Comp Premium Over Time?