What is an experience modification?

ALL California employers must provide coverage for their California employees

Largely because of claims that occur, experience modifications, fraud and payroll amounts statewide

The Department of Insurance website, The WCIRB, The Insurance Journal and many other trusted sources

It’s a percentage that compares the payroll and loss history of your company to a similar-sized company within the same industry. For example, if a company has a better than average loss record, their experience modification would be less than 100%. If that is the case you would receive a credit on your Workers Comp rates. If that is not the case however it would result in the opposite, an increase in rates. The experience modification can be closely compared to an individual’s credit score.

It is illegal in the state of California to not carry it. There will be penalties, fines and many other consequences if a worker is injured and you do not carry it. Furthermore if there is a claim and you do not have California Workers Compensation Insurance at the time the employer is still liable for all costs relating to the injury which can be devastating to any company.

This is calculated based on your payroll, premium paid and by your reported losses for the last three consecutive years

The Department of Insurance regulates the laws and the State Senate makes them

It’s a component used determine the price an employer pays for their workers’ comp insurance premium. Classifications are established for each industry and typically include all jobs or operations within a particular business.