Is this a form of workers compensation for your company?

It’s the law: Workers’ Compensation is something all business owners should pursue for their employees.

Based on a structure of US state legislature, Workers Comp is mandatory insurance for employers that ensures employees will receive proper medical care, disability benefits, and compensation for lost wages if they are hurt or injured while on the job. Employees can locate standard and hard-to-place risk policies through the appropriate agencies that scour the net for both ways.

But there’s another option: a different mode or plan that employees may want to substitute for the more commonly used general workers’ compensation and liability protection. This alternative is called the self-insured Workers’ Compensation Program.

What is it and how is it different from the more popular version?

The self-insured Workers’ Compensation program is also known as the self-funded Workers’ Compensation plan and is legal in most states. By allowing the business owner to pay each claim as an out-of-pocket expense instead of paying upfront with a standardized commercial insurance policy premium or through a state-funded policy premium, this program is attractive for several reasons:

• Gives employers the leeway to control insurance costs

• Allows employers to provide timely medical care to their injured workers

Are all business owners eligible for this form of coverage?

Not all employers can take advantage of the benefits of this alternative form of workers’ compensation. Eligibility is subject to the following terms:

• The business must be located within one of the states that support it.

• The business must have appropriate credit worthiness

• The employer must register their business as a self-insured business.

• The employer must provide a bond that guarantees that each claim will be remunerated

While the self-insured program can be extremely attractive to the business owner because of what can be perceived as a means of savings, there is another side to this story. In the event that a business is inundated with many more claims than anticipated, catastrophic debt can be incurred, especially for small businesses that cannot keep up with expenses. Due to this risk, the insurance market also introduces Excess Workers’ Compensation Insurance.

Related excess insurance? So that?

This type of excess insurance will fund claims up to a preset amount. In this way, the business at risk of catastrophic losses will not incur the costs that it would incur if self-insured claims exceed expectations.

Undoubtedly, the subject is complicated. For further clarification, speak to an independent agency that understands all the ramifications and deals with many of the major insurance companies.

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