If you’re a contractor, you know there’s a lot more to keeping your business running smoothly than just completing projects and keeping customers happy. Behind the scenes, things like workers’ compensation insurance and your experience modification factor (commonly known as an “experience mod”) play a crucial role in your ability to win contracts, control costs, and protect your bottom line.
But what happens when your experience mod takes a big jump — and suddenly you’re faced with a large debit mod? It’s a situation that can seriously affect your business opportunities, relationships with customers, and even trigger state regulations you’re required to follow.
In this article, we’ll explain what your experience mod is, how a large debit mod impacts your business, what steps you need to take to appease customers and comply with regulations, and how partnering with a specialist like BGES Group can help you protect your business and find new insurance coverage.
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What Is an Experience Modification Factor?
Your experience modification factor (mod) is a number used by insurance companies to adjust your workers’ compensation insurance premium based on your actual claims experience compared to the expected claims for other businesses in your industry.
• A mod of 1.00 is average.
• A mod below 1.00 means you’re considered a lower risk, earning you premium discounts.
• A mod above 1.00 means you’re a higher risk and will pay additional premium costs — sometimes a lot more.
Your mod is calculated based on your past claims history over a rolling three-year period. Both the number and severity of claims affect this number.
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Why a Large Debit Mod Is a Big Problem
When your mod rises significantly — especially above 1.20 — it signals to insurance companies, general contractors, project owners, and regulatory agencies that your company may have safety management issues.
Here’s what can happen:
• Higher Insurance Costs: Your workers’ comp premium can skyrocket, eating into profits.
• Lost Work Opportunities: Many general contractors and job owners won’t work with subcontractors whose mod exceeds a certain number, often 1.20+.
• Hurt Reputation: A high mod makes it harder to prove to customers and partners that your job sites are safe.
• Regulatory Action: In states like New York, if your mod reaches 1.20 or higher, the New York State Workers’ Compensation Board requires you to undergo a Regulation 59 Safety and Loss Prevention Consultation.
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What Is Regulation 59?
Regulation 59 is a New York State rule designed to improve job site safety for businesses with poor workers’ compensation claim records.
If your experience mod reaches 1.20 or higher, the Workers’ Compensation Board mandates that your company complete a Regulation 59 Safety and Loss Prevention Consultation.
This involves:
1. Hiring a State-Approved Safety Consultant: The consultant conducts a full safety inspection and workplace analysis.
2. Receiving a Written Report: The consultant provides a formal safety and loss prevention report, identifying deficiencies and recommending corrective actions.
3. Implementing Required Safety Improvements: You’re expected to correct identified hazards and implement improved safety measures within a designated timeframe.
4. Providing Documentation of Compliance: You’ll need to submit evidence to the state proving the recommendations have been addressed.
Failure to comply can result in penalties, increased premiums, or even cancellation of your workers’ compensation policy.
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How This Impacts Doing Business with Customers
When customers or general contractors learn that your mod has reached 1.20+ and you’re under a Regulation 59 consultation, it can damage their confidence in your company’s ability to maintain safe job sites.
Common issues contractors face include:
• Being removed from approved vendor lists.
• Losing bids or being prohibited from bidding on new work.
• Facing difficult questions about your safety practices and insurance status.
• Customers demanding proof of corrective actions, updated safety programs, and insurance endorsements like waivers of subrogation.
To avoid losing business, you’ll need to take immediate steps to address these concerns and show you’re actively working to improve.
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What You Can Do to Appease Customers
1. Be Proactive and Transparent:
Inform your customers and general contractors before they hear about your situation elsewhere. Be upfront about the mod increase and your commitment to resolving the issue.
2. Develop a Corrective Action Plan:
Create a written plan outlining the steps you’re taking to improve job site safety, including hiring a Regulation 59 consultant, enhancing safety training, and upgrading equipment.
3. Communicate Progress Regularly:
Keep your clients informed as you complete safety consultations, implement recommendations, and improve conditions. Share reports, safety meeting logs, and any new policy changes.
4. Offer Additional Insurance Protections:
Ensure your policies include endorsements like Regular 59 Waivers of Subrogation, which may ease liability concerns for customers and keep projects moving.
5. Work with a Workers’ Comp Specialist:
Navigating this situation alone is tough, especially when many insurance brokers don’t have experience with high-mod accounts. Partner with a specialist who understands these challenges and can help you move forward.
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How BGES Group Can Help
When your mod rises above 1.20 and Regulation 59 requirements hit, you need a broker who knows how to handle high-risk workers’ compensation accounts. That’s where BGES Group shines.
BGES Group specializes in workers’ compensation coverage for contractors — especially those facing large debit mods and tough regulatory challenges.
Here’s what BGES Group can do for you:
• Policy Review and Mod Analysis: They’ll analyze your current insurance program, claims history, and mod calculation to identify problems and solutions.
• Find New Markets: BGES Group works with insurance carriers willing to cover contractors with high mods when other brokers can’t find a home for your policy.
• Assist with Regulation 59 Compliance: They’ll guide you through the Regulation 59 process, help connect you with approved safety consultants, and assist in drafting corrective action plans.
• Negotiate Better Terms: Even with a high mod, BGES Group can advocate on your behalf to secure competitive terms and coverage improvements.
• Help Lower Your Mod Over Time: By improving your safety programs and claim management strategies, BGES Group helps position your business to reduce your mod in future rating periods.
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Contact BGES Group Today
If your experience mod is on the rise — or already above 1.20 — don’t wait until your insurance gets canceled or you lose major clients. Call the experts who can help turn the situation around.
Contact BGES Group:
Gary Wallach
Phone: 914-806-5853
Email: bgesgroup@gmail.com
Website: http://www.bgesgroup.com
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Final Thoughts
A large debit mod is a serious issue for contractors, but it’s one you can overcome with the right approach. Be transparent with your clients, comply with Regulation 59 requirements, and work with a proven workers’ comp specialist like BGES Group to stabilize your insurance, protect your business relationships, and lower your mod over time.
In contracting, reputation and compliance are everything — and having the right partner can make all the difference.