Explore Our Services

Understand Your Premium

How the cost of workers’ comp coverage is calculated

All businesses are assigned classifications based on the nature of their operations. Each classification is assigned a premium rate. These rates reflect the hazards of the particular employment.

How Your Premium is Calculated

The primary component of your premium calculation is determined by multiplying the rate (per $100 of gross payroll) for a business classification by the amount of payroll in that classification (with the exception of domestic workers). If you have several classifications, your premium is the sum of the totals for all classifications.

*The example to the right illustrates the different factors that may be used in a premium calculation on a Chesapeake Employers workers’ compensation insurance policy.

Your Experience Modification Rating

The experience modification rating, or “e-mod,” is a factor directly related to the experience (amount of losses) incurred during prior policy terms. It reflects your claims history compared to like businesses. The e-mod allows for an adjustment to your premium rate. For example, an experience modification of less than 1.00 will help decrease your final premium. An experience modification greater than 1.00 may increase your final premium.

The experience rating factor is calculated based on your payroll and incurred losses within the past 36-month period. The factor is updated each year, based on the re-evaluation of the latest 36-month period and applied to the current coverage calculation.

The primary benefit of the experience rating plan is that it tailors the cost of insurance to match the qualifying policyholder’s own loss experience. It affords the policyholder an opportunity to affect his or her insurance costs by engaging in measurable and meaningful loss prevention and loss reduction programs.

Factors That Determine Your eMod

Number & Frequency of Accidents

A business with one $25,000 claim will fare better than a business with five $5,000 claims.

Cost of Accidents/Claims

Each claim's incurred losses (i.e. paid claim costs plus reserves) are calculated.

Size of Your Business

Business size is a stabilizer, so the employer with fewer employees is not unduly penalized.

Merit Rating

Merit rating is designed to credit or debit policies that are too small in premium size to qualify for our experience rating plan. Merit rating plans afford smaller policyholders the ability to earn a credit or incur a surcharge based on their claim history.

Minimum Premium

The Minimum Premium is the lowest premium for which coverage will be issued. The Minimum Policy Premium, shown on the Information Page of the policy, is the lowest premium for which coverage will be afforded. At Chesapeake Employers, the minimum policy premium is the minimum premium fully earned at policy inception. Minimum policy premium is not subject to pro-rata or short rate adjustment for short-term coverage. The minimum policy premium is not refundable in the event of cancellation, unless the policy is cancelled flat at policy inception.