A contractor has a workers' compensation experience modification rate (EMR) of 1.25. If the base premium is $15,000, what is the actual premium owed?
Correct Answer
A) $18,750
Actual premium = Base premium × EMR = $15,000 × 1.25 = $18,750. An EMR above 1.0 increases the premium.
Why This Is the Correct Answer
Actual premium = Base premium × EMR = $15,000 × 1.25 = $18,750. An EMR above 1.0 means the contractor's claims history is worse than the industry average, resulting in a premium surcharge. The 0.25 above baseline adds 25% to the base premium.
Why the Other Options Are Wrong
Option B: $12,000
$12,000 would result from multiplying $15,000 × 0.80, which would be the formula if the EMR were 0.80 (a credit modifier). This error applies the wrong direction — a 1.25 EMR increases premiums, it does not decrease them.
Option C: $15,000
$15,000 is the base premium before modification. Selecting this answer ignores the EMR entirely and treats the modification rate as having no effect. The entire point of the EMR system is to adjust premiums based on claims experience.
Option D: $16,250
$16,250 results from adding only $1,250 (which would be 1.25% of $100,000, not 25% of $15,000). This reflects a percentage-point confusion — the EMR multiplies the entire premium, not just a fractional surcharge.
Memory Technique
EMR is a multiplier, not an adder. Think of it like a test score curve — if the curve is 1.25×, your score gets multiplied by 1.25. EMR 1.0 = industry average = no change. EMR > 1.0 = worse than average = pay more.
More Louisiana Questions
A contractor in Louisiana completes $85,000 worth of work on a residential project. The owner pays $70,000 but disputes the remaining $15,000. If the contractor files a lien claim, what percentage penalty can be awarded if the contractor prevails in court?
A contractor discovers contaminated soil during excavation that requires special disposal. The disposal cost is $12,000, and transportation is $3,500. If this was not foreseeable from the contract documents, who typically bears this cost under Louisiana law?
A construction worker is injured on a Louisiana job site. The contractor's workers' compensation carrier has 15 days to investigate. If they don't respond within this period, what happens to the claim?
Under Louisiana law, what is the minimum amount of workers' compensation insurance coverage required for construction contractors?
A contractor's employee is injured on a job site in Louisiana. The contractor has workers' compensation insurance. Which statement is correct regarding the employee's rights?
Under Louisiana Civil Code, if a building contract does not specify a completion date, when is the work considered to be due?
Under Louisiana building codes, what is the minimum width required for emergency egress windows in bedrooms?
A Class B contractor in Louisiana wants to bid on a project worth $175,000. What action must they take?
A contractor's worker is injured and files for workers' compensation. The injury occurred due to the worker's intoxication. Under Louisiana law, what is the likely outcome?
A general contractor discovers contaminated soil during excavation for a commercial project in Louisiana. Which state agency must be notified?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
Under Louisiana's workers' compensation law, what is the waiting period before temporary total disability benefits begin?
Next Question
Under Louisiana's Private Works Act, what is the maximum time period for filing a privilege or lien claim after the work is completed or materials are furnished?