It’s the law: Workers Compensation is something that all business owners must procure for their employees.
Based on an a structure of US state legislature, Workers Comp is a required insurance for employers that ensures employees will receive proper medical attention, disability benefits and loss of wages compensation if they are hurt or injured while on the job. Employees can locate standard and difficult to place risk policies via the appropriate agencies that scout the network for both forms.
But there is another option – a different mode or plan that employees may want to substitute from the general workers comp and liability protection that most often is 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. Allowing the business owner to pay for each claim as an out-of-the-pocket expense in contrast to paying up front with a standardized commercial insurance policy premium or through a state fund policy premium, this program is attractive because of a number of reasons:
• It gives employers the leeway in controlling insurance costs
• It allows employers to provide their hurt workers with timely medical care
Are all business owners eligible for this form of coverage?
Not all employers can take advantage of the benefits of this alternate form of workers comp. Eligibility is bound to the following terms:
• The business must be located within one of the states that endorse it
• The business must have appropriate credit merit
• The employer must register his enterprise as a self-insured business
• The employer must post a bond that pledges each claim will be remunerated
While the self-insured program might be exceedingly attractive to the business owner on account of what may be perceived as a means of savings, there is another side to this story. In the event a business finds itself flooded with far more claims than anticipated, catastrophic debts may be incurred – especially for the small business that cannot keep up with the expenses. Because of this risk, the insurance marketplace also presents Workers Compensation Excess Insurance.
Related excess insurance? What for?
This type of excess insurance will fund claims up to a prearranged amount. In this way, the business at risk for catastrophic losses will not incur the costs that would put it under in the event self-insured claims exceed expectations.
No doubt, the topic is a complicated one. For greater clarification, speak to an independent agency that understands all the ramifications and deals with many of the leading insurance companies.