Workers’ compensation is regulated at the state level, which means everything is standardized and everyone pays the same rate as everyone else. Right? Well, of course that is not the case. There are a number of factors that affect your own coverage, how much you pay, and even how easy or difficult it is for you to get your coverage.

At first, the amount you pay and your ability to get workers’ compensation coverage is determined by factors like your industry classification, whether you’re a new or established business. Depending on what state you’re in and how many employees you have, it also determines whether or not you should have this type of insurance to begin with.

Small businesses can also seek the support and services of employee leasing providers to be part of their coverage, usually a much larger and better established platform. This generally helps reduce coverage costs.

All of this, however, and we haven’t gotten to the point of this guide, which is workers’ compensation mod rates, one of the most important variables in determining how much you pay for your coverage. A new business generally receives a modification rate of 1.0. All of this means that you pay 100% of the mandatory or regulated rate for your type of industry.

Of course, the term modifier implies that this number will not always be the same. Your rate may be reduced in subsequent years. The A.95 modification fee, for example, means you only have to pay 95% of the industry standard. The state and industry you are in will once again affect how, when and to what extent your modification rate can change.

Of course, workers’ compensation mod rates can also increase, much to the chagrin of business owners. A mod fee of 1.15 means you pay 115% of the standard fee. Such increase is generally based on the number and severity or range of incidents reported from the previous year or time period reported.

If your rate goes high enough, that’s when you may even have a hard time getting coverage. Different states have organizations or services that then specialize in high-risk or hard-to-obtain workers’ compensation policies. That might help make sure you’re covered, but you’ll have to prepare for the extra cost.

Understanding the mod rates on your workers’ compensation is one more way to understand how much you’re paying and for what reasons. Be sure to check with an insurance agent or broker licensed in your state if you have any questions about getting a new policy or searching for a better deal.