Your experience modification number, that’s what! In short, an experience modifier, better known as an ex-mod, is a number used by the insurance companies to determine the price of your annual premium based on how much of a risk it will be to insure you. This number is calculated based on your previous loss experience, which is usually affected by the number of worker’s compensation claims you have and how small or large each claim was. It is also calculated based on how likely it will be for you to have a loss in the future.
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How does an Ex-Mod affect my premium?
We don’t expect you to be an expert on calculating an ex-mod number, but we want you to know what goes into it, because knowledge is power. An ex-mod is expressed as a number, usually between .77 and 2.01, based on our experiences. These numbers are technically percentages, that will determine your new premium cost. In other words, if you had an ex-mod of .85, you would only have to pay 85% of your policy’s premium, and would result in a 15% discount. On the other hand, if you had an ex-mod of 1.56, then the price of your premium would go up by 56%, and no one wants that.
Will my Ex-Mod ever go back down after a big claim?
It’s important to understand that the last three years of your policy’s record, based on the number of claims you have, determine where your current ex-mod will fall. For example, let’s say you are the owner of “ABC Trucking Company,” and you’ve been claim free from worker’s comp claims for years, leaving you with an ex-mod rate of .87. In this scenario, you’d be doing great, because you’d get a 13% discount on your premium. But suddenly, in March of 2018, you got hit with two big claims that raised your ex-mod up to a 1.12. Now instead of getting a discount, you’re going to pay out an extra 12% on your premium. Not only that, but this will also reflect on your policy until March of 2021 because you are considered a higher risk in the eyes of an insurer.
Even if you have no claims in 2019, 2020, and 2021, your policy would still show that you had the two severe claims back in 2018, and your ex-mod will still be affected.
How to avoid claims
Now that you understand how the Ex-Mod is calculated and how it will affect your premium, you know how important it is to avoid any and all future claims. Our Parcel Delivery Insurance team is dedicated to helping you do just that. As an added feature, our clients receive regular safety materials for you to review with your team. These materials cover a wide range of things such as how to properly enter and exit your truck with a package, to reminders on how to handle weather conditions and much more.
At Paradiso Insurance, we want to do everything we can in our power to help you succeed. Because when you succeed, we succeed. If you are an Amazon DSP or LSP, or a FedEx ISP or CSP contractor, we can help. Give our team a call today at 860-453-0116 and let us show you why we are different from other insurance agencies.