Employees are the backbone of any business, which is why they should be protected and insured. That’s where workers’ compensation insurance comes in. These policies come in to protect workers in case they get injured or ill while at work.
In the United States, most workers’ compensation programs are administered depending on the state. Let us look into how workers’ compensation insurance receives funding under the supervision of the state.
Workers’ compensation insurance is designed for the welfare of employees and their safety while doing their job. These allow them protection in case an injury happens while on the job or if they get sick while working.
States use workers’ compensation insurance in two main ways:
In monopolistic states, the government requires that employers buy workers’ compensation insurance only from a state insurance fund. This means companies are not allowed to acquire policies from a private insurer.
A monopolistic state insurance fund system is currently observed in Ohio, Washington, Wyoming, and North Dakota.
On the other hand, there are states that allow employers to decide on whether they would prefer going for a private carrier or the state. This gives the chance for many providers to attempt competing for your business.
Because these funds are linked to the government, they do not operate for profit and their main focus is on providing the best deals for workers in the state. The fund comes from premiums and investment income in the state.
These state insurance funds depend on the given legislature from the state. These guidelines decide on the initial resources, both logistics and finances, and then the fund eventually turns into a self-sufficient one.
As a business owner, it is important to understand the specific insurance guidelines set on your state. Each one has its own rules and regulations, so make sure you are fully aware of the extent of your jurisdiction.
If you want to learn more about workers’ compensation insurance, check out our Worker’s Compensation guide today!
Marie Brown is an insurance underwriter. She completed her Economics degree at the Massachusetts Institute of Technology. With her expertise and dedication, she ensures her clients’ insurance applications are approved.