What is Split Point?
Split point refers to a cost allocation method used in workers’ compensation insurance. It determines how claim costs are divided into primary and excess portions, which in turn affects an employer’s experience modification rate (EMR). The EMR is a key factor in calculating workers’ comp premiums, as it reflects an employer’s claim history relative to similar businesses.
Under the split point system, a set dollar amount—known as the split point—is used to divide each claim. Costs up to the split point are considered “primary” and have a greater impact on the EMR. Costs above that threshold are “excess” and have less influence. This approach encourages loss prevention by emphasizing the importance of preventing frequent, smaller claims.
Who Needs It
Employers of all sizes who purchase workers' compensation insurance are subject to the split point system, particularly those who qualify for experience rating. Typically, this applies to businesses with higher payroll or those operating in higher-risk industries. Understanding how split point works can help business owners manage their claims and potentially reduce premium costs over time.
What It Typically Covers
While split point itself does not provide coverage, it directly affects how claims are assessed for your workers’ compensation policy. The claims it applies to generally cover:
- Medical expenses for injured employees
- Wage replacement during recovery
- Rehabilitation and therapy costs
- Death benefits in fatal cases
Each claim filed is evaluated under the split point model, with the primary portion receiving more weight in EMR calculations.
Common Exclusions and Limitations
The split point method does not apply to every employer—only those eligible for experience rating. Very small businesses may be exempt. Additionally, not all claims influence the EMR equally. For example, first aid-only claims or those reimbursed by a third party may not be included.
Factors That Influence Cost
While the split point itself is set by the state rating bureau or the National Council on Compensation Insurance (NCCI), your overall workers’ compensation costs are influenced by:
- Your business’s industry classification
- Payroll size
- Frequency and severity of past claims
- State-specific rules and minimum thresholds
- Safety programs and claims management practices
Proof of Insurance & Compliance
Workers’ compensation insurance is required in most states, and compliance is verified through certificates of insurance. Your EMR, influenced by the split point system, may also be requested by clients or contractors as proof of a strong safety record. Requirements vary by state, so be sure to check with your local insurance authority or agent.
How to Get a Quote
To understand how the split point may impact your workers’ compensation premium, get a personalized quote from our team. Start your quote today.
Frequently Asked Questions
What is the current split point value?
The split point value varies by state and is periodically adjusted by rating bureaus like the NCCI. Check with your insurer or rating organization for the most current amount.
How does the split point affect my insurance premium?
It influences your experience modification rate (EMR), which is a key factor in setting your workers' compensation premium. More frequent, smaller claims weigh heavily due to the split point system.
Can I reduce the impact of split point on my EMR?
Yes. Effective safety programs, timely reporting, and return-to-work policies can help reduce claim frequency, lowering your EMR over time.
Is split point the same in every state?
No. While many states use NCCI guidelines, some have their own rating bureaus and may set different split point values or rules.
Do all claims count toward the split point calculation?
No. Only claims that are used in your experience rating are subject to the split point. Some minor claims or reimbursed losses may be excluded.
Still have questions? Talk to a local insurance expert.