Which of the following describes the impact of a higher EMR on a construction bid?

Which of the following describes the impact of a higher EMR on a construction bid?

• A. Lower bid
• B. Higher bid
• C. No impact
• D. Not sure

Answer: (B)

When a contractor’s Experience Modification Rate (EMR) is higher, their workers’ compensation insurance costs are higher because insurers view them as higher risk. Those insurance costs are part of the overall cost of delivering a project, and bids are set to cover all anticipated costs plus profit. So a higher EMR pushes the bid upward to account for the increased insurance expense. The idea that the bid would be lower or unchanged ignores the added cost tied to risk, and saying “not sure” doesn’t reflect the documented relationship between EMR and insurance premiums.

When a contractor’s Experience Modification Rate (EMR) is higher, their workers’ compensation insurance costs are higher because insurers view them as higher risk. Those insurance costs are part of the overall cost of delivering a project, and bids are set to cover all anticipated costs plus profit. So a higher EMR pushes the bid upward to account for the increased insurance expense. The idea that the bid would be lower or unchanged ignores the added cost tied to risk, and saying “not sure” doesn’t reflect the documented relationship between EMR and insurance premiums.