Knowledge Corner

For construction companies, an Experience Modification Rate (EMR) is the number that insurance companies use to measure past claims. What does this mean for you?

If your rates aren’t up to industry standards, your construction company may struggle with insurance payments, and may have trouble landing a project offer. Below are 3 reasons why EMR matters to construction companies. 

1. EMR affects your insurance premiums 

When your company has a lower EMR, it means your Worker's Comp Insurance premiums will be lower as well. EMR measures the previous 3-year policy average. Rating Bureaus universally use 1.0 as the starting point for every company’s loss history review.

• Companies with an EMR below 1.0 will receive a credit or discount on their insurance premium. 
• Companies with an EMR over 1.0 will have a debit or pay additional insurance premiums.  

2. EMR can determine which construction companies are hired

Previous claims make up a company’s EMR. Typically, when a construction company has high EMR rates, it reflects the company’s poor safety practices. This plays a major role when Owners, General Contractors, or other Contractors are looking to hire a contractor for a project.

Often, companies with high EMR rates are passed over for jobs because they are too much of a safety risk. A lower EMR reflects a company’s good safety program and therefore a less risky choice for a project.

3. EMR can help construction companies improve their job safety

Having a strong safety program is also important for an EMR, especially when avoiding possible future risks. Some ideas to consider for your company’s safety management include: 

• Mandatory equipment operations training
• Work-site safety inspections 
• Employee handbooks should be thoroughly reviewed
• Speak with injured workers and show them that you care about their safety

The better your safety program, the less claims a company has. The less claims a company has, the better their EMR. If you have any additional questions about EMR or other insurance policies, TSIB is here to help! You can give a call us at 201-267-7500. To learn some quick facts about the basics of EMR, you can also download your free ebook.