Is this a form of Workers Comp for your business?

It’s the law: Workers’ compensation is something that all business owners must provide for their employees.

Based on a structure in the US state legislature, Workers Comp is a required insurance for employers that ensures that employees will receive proper medical care, disability benefits, and compensation for lost wages if they are injured or injured while on the job the job. Employees can find standard and hard-to-place risk policies through the relevant agencies scouting the network for both forms.

But there is another option—another way or plan that employees may want to substitute from the standard workers’ compensation and liability protection that is most commonly used. This alternative is called the self-insured Workers Comp Program.

What is it and how does it differ from the more popular version?

The self-insured Workers Comp program is also known as the self-funded Workers Compensation plan and is legal in most states. By allowing the business owner to pay for each claim as an out-of-pocket expense, as opposed to paying up front with a standardized commercial insurance premium or through a government fund insurance premium, this program is attractive for a number of reasons:

• It gives employers discretion to control insurance costs
• It allows employers to provide timely medical attention to their injured workers

Are all business owners eligible for this type of coverage?

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

• The company must be located in one of the states that approve it
• The company must have appropriate creditworthiness
• The employer must register his company as a self-insured company
• The employer must provide a bond that pledges that each claim will receive interest

While the self-insured program may be extremely attractive to the business owner due to what may be perceived as a means of savings, there is another side to this story. In the event that a business is inundated with far more claims than expected, catastrophic debt can result – especially for the small business that cannot keep up with expenses. Because of this risk, the insurance market also presents excess workers’ compensation insurance.

Related excess insurance? Why?

This type of excess insurance will fund damages up to a pre-agreed amount. In this way, the company at risk of catastrophic loss will not incur the costs that would be incurred if self-insured claims exceed expectations.

There is no doubt that the subject is complicated. For greater clarification, speak to an independent agency that understands all the ramifications and deals with many of the leading insurance companies.

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