How does my experience modification rate (X-Mod) affect my premium?

Your X-Mod is a multiplier applied to your workers' compensation premium, so it moves the premium by the same percentage it sits away from 1.00. A mod of 1.25 raises your premium about 25 percent; a mod of 0.80 lowers it about 20 percent. Because workers' compensation is usually the largest insurance bill a plumbing company pays, the mod has a bigger dollar effect than any other single line on the policy.

The number is published by the Workers' Compensation Insurance Rating Bureau of California (WCIRB), a licensed rating organization, and it follows you from carrier to carrier. Your insurer applies it; neither your insurer nor your broker can change it. It compares your company's actual reported losses to the losses WCIRB expected from a company with your payroll in your classifications over a three-year experience period.

Not every plumbing company has one. WCIRB experience-rates an employer only when its expected losses over the experience period reach an eligibility threshold that is adjusted annually ($10,400 for ratings effective September 1, 2024). A one- or two-person shop is typically below that and pays the carrier's base rate.

The mod has a second cost that does not show on the invoice. Many general contractors, property managers and public owners set an X-Mod ceiling on their prequalification forms, often 1.00 or 1.25. That is a contract requirement, not California law, but a mod above the ceiling means you cannot bid the job regardless of price.