Starting a New LLC and Your Experience Mod

Updated September 29, 2026

You’re setting up a new LLC to take over your contracting business on January 1, whether for liability, taxes, a new partner or your accountant’s advice, and with renewal coming you want to know whether your old experience mod follows you.

Starting a new LLC does not, by itself, reset your workers’ comp experience mod. Under NCCI’s rules, a new legal entity that carries on the same business is an ownership change that has to be reported, and NCCI’s ownership rules decide whether the prior experience transfers to the new entity or combines with it. NCCI’s own summary is plain: generally, the past experience of the business is transferred to the new owner.

How a new LLC affects your workers’ comp experience mod

Your experience mod is the multiplier on your premium built from three years of your business’s own claims and payroll. When a new entity takes over that same business, NCCI treats it as an ownership change that has to be reported and decided.

The ERM-14 is NCCI’s form for reporting an ownership change, and its instructions list the kinds of transactions it covers. Two of them fit a January 1 restructure directly: a name or legal entity change, and the formation of a new entity that acts as, or in effect is, a successor to another entity. If your new LLC has the same owners, the same crews, the same equipment and the same customers as the company it replaces, that second description is a close fit.

What NCCI decides from there depends on the specifics you report: who owned what before, who owns what after, and what the new entity does. If you want the broader picture of what moves a mod and what doesn’t, what changes your EMR covers ownership changes alongside the other levers.

A new entity is not a way to shed a mod

Some contractors hear that a new company starts without a rating history and wonder whether a new LLC is a way out from under a bad mod. It isn’t, and planning around that idea can leave you worse off than you are now.

The rules are built for exactly this situation. A successor entity is one of the transactions the ERM-14 is designed to report, and NCCI can issue, retract or revise the current mod and up to two preceding mods because of ownership or combination changes. So a rating you’ve been putting on prequalification forms can be revised after the fact once the change is reported, and the rating effective date, the date a mod takes effect on your policy, can move too. Explaining to a GC why the number on last month’s form changed is a harder conversation than explaining the number you actually have.

If your mod is high, the useful work is checking whether it’s accurate, and fixing what isn’t, on the bureau’s schedule.

Report the change in writing within 90 days

When ownership changes, you, the employer, must notify your carrier in writing within 90 days of the date of the change. NCCI accepts either a signed Request for Ownership Information (the ERM-14 form) or the same information in narrative form on your letterhead, signed by an officer of the business. Your carrier forwards it to NCCI. NCCI also takes the ERM-14 through an online application.

The report asks you to list every transaction and the date it happened, and to give complete ownership information for every entity involved. For a January 1 restructure, that means the old company, the new LLC, who owns each and in what share, and the effective date of the change.

Treat 90 days as the outside limit. Telling your agent before the new policy is written lets them set up the renewal on the right entity and the right rating from the start.

When the experience combines instead of transfers

Not every contractor closes the old company when the new one opens. Some keep the old entity alive for a while to finish jobs, collect receivables or hold equipment.

If both entities have more than half of their ownership in common, NCCI combines their experience into one mod. The reasoning in NCCI’s primer is that the owner is responsible for the safety and loss prevention programs in each business. So running the old company and the new LLC side by side under the same majority owners generally means one combined rating. Combinability is the name for these rules, and it’s worth asking your agent directly whether it applies to your structure.

Where ownership changes go wrong in both directions

Ownership changes are one of the places a worksheet can be wrong, and the error can run either way. A claim from an entity that shouldn’t be in your rating can get carried in. Experience that should have transferred or combined can be left out, which produces a rating that doesn’t hold up once someone catches it. A change reported late, or described loosely, gives the bureau less to work with.

Your experience rating worksheet, the bureau’s document showing the full calculation, lists the entities and the policies it draws from. After your first rating under the new LLC, check that list against what you reported. Claims that belong to a different entity are one of the ten errors worth checking on every worksheet, and an ownership change is when that one is most likely to show up.

If the new LLC brings in new owners or changes what the business does, whether the experience transfers depends on the details NCCI’s ownership rules look at. Don’t assume either answer. Report it fully and ask your agent what the bureau decided and why.

Independent-bureau states have their own rules

NCCI’s experience rating plan does not apply in California, Delaware, Michigan, New Jersey, New York or Pennsylvania. North Dakota, Ohio, Washington and Wyoming administer their own plans and rates. In Indiana, Massachusetts and North Carolina the plan applies, but an independent rating organization in each state produces the intrastate mods. Minnesota and Wisconsin also have their own independent rating organizations.

If your business is in one of those states, the ownership reporting form, the deadline and the transfer rules can differ from what’s described here. Ask your agent which bureau rates you, and report the change the way that bureau asks.

What to do before January 1

Tell your agent about the new LLC now, in writing, with the planned effective date and the ownership of both entities. A short, specific email gets a better answer than a phone call in the middle of renewal season.

Ask three things. Which ownership form does your bureau need, and who’s sending it. Will the experience transfer or combine, and will the rating effective date change as a result. Which entity names will appear on the next worksheet.

Keep a copy of what you file and the date you filed it. When the next worksheet arrives, get the full document, not just the number, and confirm the entities on it match what you reported.

Checking the number your new LLC will carry

The free EMR Cost & Bid Check calculator asks whether your business has changed ownership and shows what your current mod is costing you against common bid thresholds. A full verification checks your worksheet against your loss runs (the carrier’s list of your claims), payroll and ownership history line by line, and tells you exactly what to send your agent or carrier if something’s wrong. It’s a flat fee, no contingency, and the savings are yours. Get on the waitlist to be first in line.