In most states, you have a choice of workers compensation coverage, giving you the option of shopping around to help save costs. What you might not realize is that there are risk transfer options outside of coverage through a regular insurance carrier that could satisfy your state’s requirements for coverage while allowing you to save money and create a more responsive claim system. When you opt for self-insured work comp benefits, your company essentially signs up to pay claims itself, without going through an intermediary.
Self-insurance for workers compensation comes in two general organizational structures. The more expensive at startup is full self-insurance, where your business manages its claims and pays out of its reserve funds. It allows you to make sure your workers get timely treatment after an accident because you are in control of the claim processing and payment. It can save money over time as your new processes gain efficiency when compared to the alternative, which is to participate in a self-insurance fund. Those funds group financial contributions from a few businesses that participate together, allowing each to set aside a smaller reserve. This option costs less to start with, but it does involve giving up a little control over the process to an outside party.