Is this a form of Workers Comp for your company?

It’s the law: Workers’ Compensation is something all entrepreneurs must arrange for their employees.

Based on a structure of the U.S. state legislature, Workers Comp is a mandatory insurance policy for employers that ensures that workers receive proper medical care, disability benefits, and loss of wages compensation if they are injured on the job. Employees can find standard and hard-to-place risk policies through the appropriate agencies exploring the network for both.

But there is another option: another mode or plan that employees may want to replace with the general employee insurance and liability protection that is most often used. This alternative is called the Confident Workers Comp Program.

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

The self-funded 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 each claim as an out-of-pocket expense as opposed to paying up front with a standardized commercial insurance premium or through a state fund policy premium, this program is attractive for a number of reasons:

• It gives employers the freedom to control insurance costs
• It enables employers to provide timely medical care to their injured employees

Are all entrepreneurs eligible for this form of cover?

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

• The company must be located in one of the states that endorse it
• The company must have the correct credit rating
• The employer must register his company as a self-insurer
• The employer must post a surety guarantee that any claim will be reimbursed

While the self-insured program can be extremely attractive to the entrepreneur because of what could be seen as a way to save, there is another side to this story. In the event that a company is inundated with far more claims than anticipated, catastrophic debt can accrue – especially for the small business that cannot keep up with costs. Because of this risk, the insurance market also offers Workers Compensation Excess Insurance.

Related deductible insurance? for what?

This type of deductible insurance finances claims up to a pre-agreed amount. In this way, the company at risk of catastrophic losses will not incur the costs it would incur if its own insured claims exceed expectations.

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No doubt the subject is complicated. For more clarity, contact an independent agency that understands all the ramifications and does business with many of the leading insurance companies.