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Contractors Insurance

Like most industries, the contracting business has been hit particularly hard in the last four or five years – perhaps even more so than most. The economic downturn that resulted in unprecedented foreclosures, as well as fewer contracts for building and remodeling, has reduced the amount of income for these business entities around the country.


Many construction firms have laid off workers, reducing their staff, and have taken other measures to trim costs to keep their operations going. There is some positive movement in the economy of late, with the rise in rental properties and decreased vacancies and investors looking in this space as a growth opportunity that could generate more development business for the construction industry. But one way that firms can continue to reduce costs is by looking at their Workers Compensation experience modification factor.


An experience modification factor (mod factor or the ex-factor) has a direct impact on your workers comp premium. The mod is calculated based on data reported to the rating bureau by prior insurance carriers. Incorrect or incomplete data can cause incorrect mod factors, which can result in an increase in premiums. Therefore, it’s critical that you review your loss and payroll data to make sure the calculation is complete and accurate.


Additionally, as losses remain in the experience rating formula for three years, the mod factor is influenced more by small, frequent losses than by large, infrequent ones. To minimize these losses, develop a sound safety program and loss prevention procedures and implement a Return to Work program. Also, conduct an effective self-inspection and institute an accident investigation program to manage claim frequency.


Set safety performance goals for supervisory roles, and train employees in their responsibilities for safety and enforce conformance with these responsibilities. Be sure to communicate with employees on an ongoing basis about the importance of safety.


There are other steps to take in controlling workers compensation costs in addition to the ones mentioned here.