How to lower workers’ comp premiums

When an employee gets hurt on the job, the top priority is making sure that they’re okay and that they get the care that they need. So it’s important for employers to have sufficient workers’ compensation coverage to make sure that their employees and their families are provided for if an accident happens on the job. However, there are still a few things that you can do to manage the cost of your workers’ compensation premium. We’ve put together a list of six tips that will help you understand what goes into determining your workers’ compensation premium and explain how you can lower it.

1. Make a point to understand your company’s modification factor.

Your business’s modification factor, or mod, can impact your workers’ compensation premium. A mod is a way of measuring how your company compares to others in your industry when it comes to your risks and your claims. It basically shows whether your losses are better or worse than they should be.

Some things to know about mods:

  • Most states use the National Council on Compensation Insurance to take the mod measurement. They collect the data to figure out your score.
  • Mods are calculated by comparing the anticipated losses of a business in your industry to your business’s actual losses.  
    • Note: Company size, unexpected large losses, loss frequency, and loss severity are all areas of comparison.
  • The mod can either add to or take away from your premium.
    • If you have a mod of above 1.0, you’re considered as having a debit, meaning that your losses are worse than they should be. This results in a higher premium.
    • If you have a mod that’s less than 1.0, you’re considered as having a credit, meaning that your losses are better than they could be. Your insurance carrier may lower your premium.

2. Make safety a priority.

Train your employees about proper safety protocol. Make sure that they receive enough training and that they know that you value adherence to the safety policies. Also, make it a point to talk about safety, and not just in a training session way. The more it’s discussed around the workplace the more it will stick.

Save money on insurance for your small business. Get a quick business insurance quote today.


Here are some other safety tips:

  •   Reduce job hazards to create the safest workplace possible.
  •   Prepare emergency announcements. Run tests of the announcement system and make sure that employees know how to respond.
  •   Have a flooring material that provides a low risk of slipping.
  •   Minimize distractions, such as music.
  •   Create an ergonomic workplace to reduce the chances of injury or strain. Each workstation should be customized for the tasks that employees perform there.
  •   Teach employees how to lift properly so that they don’t hurt their backs.  

More safety leads to fewer accidents, which in turn makes your claims history better. All of this results in you paying a lower workers’ compensation premium. It’s also common sense—you don’t want to put anyone in harm’s way.

3. Have a modified duty program.

Creating a return to work program allows employees who have been injured to come back to work and perform tasks that have been tailored for what they’re physically capable of doing. Ensure that your employees get quality medical care and emotional support after their accident.

Make sure that the work you assign to your injured employee is meaningful. This isn’t a punishment, and it shouldn’t make them feel as though they’re not valued. The goal is for them to know that they’re contributing to the company despite being injured.

4. Investigate accidents.

Make sure that you do a prompt and thorough investigation into all accidents. It’s important to talk to multiple people and witnesses to determine exactly what happened. Take the time to inspect the area in which the accident occurred. It’s best to conduct your investigation within 48 hours of the incident, as your witnesses will recall more details about what happened. Keep all your findings organized and be thorough. By doing all of this, you can make sure that the accident or injury won’t happen again – and making fewer claims helps you lower your workers’ compensation premium.

Also, investigate “near miss” incidents. These are accidents waiting to happen. If you can figure out what caused a near miss or reduce the chances of it happening again, you can head off an accident before it happens.

5. Report injuries ASAP.

Don’t delay in reporting a workplace accident. It’s best to report it as quickly as possible. The Department of Labor requires that several reports be filed. The First Report of Injury or Occupational Disease must be completed, as mandated by your state’s workers’ comp laws. HR, the employee’s supervisor, and the medical professional who treated the employee should also receive copies of the report.

Along these lines, make sure that your employees know that they should inform you of any accident or injury as soon as they can. You can’t report something you don’t know about.

6. Take a look at your payroll.

Are all of your job classifications correct? Are all the payrolls correct? This information needs to be accurate to make sure that your workers’ comp matches what you have on record.

Protect your small business with a customized insurance plan.


Of course, the employee is the priority. It’s important to make sure that you have sufficient coverage. Making your workplace safer for your employees will help you reduce your workers’ compensation premium. It’s a win-win for everyone!

If you have any questions about your workers’ comp coverage, we’d be happy to talk to you about your business and your specific risks. Our team of insurance professionals can help you get multiple quotes for your insurance so that you can compare coverages and pricing – and save money on your business insurance. Get started with your quotes by filling out our online form or giving us a call today.