Your Experience Modification Factor

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Imagine having a valued employee get hurt at your workplace. Now imagine not having workers compensation insurance. Could you be sued? Could you lose your business? Workers compensation insurance is a necessity for your business. However, many businesses overpay on their workers compensation premiums.

How much you pay on your premium is determined by your experience modification factor. Though it is very easily controlled, approximately 40% of businesses have an incorrect experience modification factor. Here is a brief overview of what the experience modification factor is and how it works. This can be a complicated subject, so if you have additional questions, please contact our East Tennessee office. We would be happy to help answer any questions you might have.

The Basics

What is the experience modification factor? The experience modification factor determines the premium you pay for workers compensation insurance. It is based on the losses your insurance company has experienced from your business. The workers compensation experience modification factor is done by the National Council on Compensation Insurance (NCCI). They get data from all the states they work in, including Tennessee and Virginia, to create an experience modification factor (mod). A mod of 1 is the average of all the data collected. Thus, if your mod is above 1, you are worse than the average in your profession in terms of claims and safety. However, if your mod is below 1, you are better than average.

Your Mod and Your Premium

If your manual premium is $50,000 for your profession, but you have an experience modification factor of 1.5, you will multiply 1.5 times $50,000 to get your new premium. However, if you are better than average and have, for example, a mod of 0.80, you will multiply 0.80 by $50,000 to calculate your premium.

Class Codes

The experience modification factor takes into account the class codes that you have, and the payroll that you had in those class codes. The higher your risk and the higher your expected losses, the lower your mod can be if you don’t end up with any claims. The rates for roofers or loggers are quite high. If you have $100,000 in payroll, the insurance company is expecting you to have some claims. Therefore, if you end up not having any claims, you will have a low mod. However, if an office has $100,000 of payroll, the insurance company is not expecting you to have many claims at all. Thus, an office will have a low mod. However, the office’s mod probably won’t be as low as someone doing logging or roofing with $100,000 in payroll if they also do not end up with any claims.

Need Help?

Those are some of the basics of the experience modification factor for your workers compensation insurance. There are a number of details dealing with this topic, so we would be happy to sit down with you and give you a free report on your mod. Your experience modification factor is one of the few things in insurance that you can control and manage very easily. Contact our Tri-Cities office at (423) 292-4142, and we will answer any of your questions and help you make sure your mod is correct.

Debit Cards: A Threat to Your Small Business

With more men and women joining the workforce without checking accounts, many employers in the Johnson City, Tennessee area have found the need to start paying their employees with debit cards. However, this method of payment poses a couple of issues for employers.

The Problems

First, you cannot require your employees to have a checking account or to receive their paycheck in the form of a debit card. Second, you have to disclose the fees associated with the account, the account history, and their rights.

The most common issue of these two is the fees associated with using debit cards. If fees on their card cause their hourly wage to drop below minimum wage, you are in violation of the Fair Labor Standards Act (FSLA). This can also come into play when you withhold funds from their paycheck for failure to return company equipment, their uniform, their cell phone, etc. The FSLA requires that all employees be paid at least minimum wage, so be careful. Make sure you do not drop the total amount of their pay check divided by hours worked below the current minimum wage.

Contact Us

If you have any questions about this or any of your business insurance needs, contact our Tri-Cities office today at (423) 292-4142 or email us at help@veritasrm.com. We will be glad to help you make sure you have the coverage you need.

Insurance for Historical Buildings

There are a lot of beautiful historical homes and commercial buildings around the Tri-Cities, Tennessee area. Downtown Jonesborough (Tennessee’s oldest town), Johnson City, Kingsport, and Bristol are all marked by their historical buildings. Historic districts do so much to preserve local history. However, historical buildings can come with certain challenges. When insuring historical buildings and homes, there are certain things you must do in order to get the coverage you need.

More Expenses Need Coverage

Oftentimes, local historic districts have strict regulations on remodeling and authenticity. In the case of disaster, if your historical building or home is only insured with a standard policy, you may not have the coverage you need to meet all of the distinct requirements for older buildings in your town or city. For example, finding authentic or period appropriate building materials and parts can be difficult and costly. In addition, new codes may require certain things like sprinkler systems or elevators in the building. This creates extra expenses as well.

A Standard Policy is Not Enough

A standard insurance policy should pay you a substantial portion of the cost to rebuild. However, it won’t provide everything needed to comply with the additional building codes. This leaves you unable to rebuild without very large out-of-pocket expenses. It could also leave you needing to obtain a loan to finance the balance or repair bills due to city, county, or state laws. If you own a historical building, you should carefully look over your insurance policy and sit down with your insurance agent to figure out what your exposures are. It is important to be fully covered in the event of a claim.

Get Coverage

If you have any questions about insuring your home, historical building, or business, or have questions about high value home insurance, please contact our Johnson City office at (423) 292-4142, or send an email to help@veritasrm.com. We would be happy to give you more information and help you make sure you have the coverage you need.