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Frequently Asked Questions

1. Why is my Worker's Compensation so expensive? 

WC rates in California are among the highest in the country and there are 2 principal reasons: a very high litigation rate and an experience modification formula that severely punishes employers for having claims, even small ones.

2. What is an experience modification (ex-mod) factor?

The ex-mod is a factor (multiplier) that is applied to your rates. If your claims experience mod is less than 1.00 you will receive a discount and if it is greater than 1.00 you will pay a surcharge.

3. How does the workers compensation (WC) experience modification formula work?

The formula uses 3 years’ of payroll and claims and compares the employer’s claims experience against others in CA in the same classification. If your claims experience is better than average you will receive a credit mod (less than 1.00) and if worse than average you will receive a debit mod (higher than 1.00)

4. What counts as an insurance claim?

The following counts as an insurance claim:

• Medical costs including tests, PT, drugs, etc.

• Disability payments, both short term and permanent

• Reserves (estimates of future costs) are included the same as payments

• Claim handling expenses including investigation and legal are not included

• Claims under $250 are not included

5. How can I reduce Worker's Compensation (WC, Worker's Comp) claims?

Unfortunately it is not as simple as establishing a good safety program, although that is of course important. The principal driver of claim costs in California is litigation and reining that in requires a much broader risk management approach that includes hiring, claims management, safety, employee communication, first aid, etc. ERM (for Enterprise Risk Management) has deep expertise in these and is very successful at reducing WC claims and costs. 

To learn more about ERM's strategies to help reduce Worker's Comp claims speak with one of our agents at (949) 222-0444. 

We also have a few blogs on our strategies:

     1. Is your hiring practice creating more Worker's Compensation claims?

     2. Employee Frustration

     3. Disgruntled Employees Retaliate

     4. Explain the pros and cons of WC claims to employees

6. Does worker's compensation cover illegal aliens?

Yes, in the state of California, illegal aliens are currently covered under worker's comp

7. Do I need to report all injuries to my carrier?

No, however all first aid injuries are recommended to be reported

Do you have a question that we haven't covered? Please call an ERM agent (949) 222-0444 or email

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