The success of a company often depends on the business owner’s ability to make good decisions. When it comes to worker’s compensation, many employers may feel like they do not have a choice in the matter because of state regulations and laws. The State of California Department of Industrial Relations says that any company that hires employees must carry a worker’s compensation insurance policy with a premium rate determined by the specific industry, number of employees and past injuries of the business.
While it may seem that employers have no options when it comes to worker’s compensation, the opposite is actually true. In addition to purchasing through the State Compensation Fund or a licensed insurance company, the Self-Insurance Institute of America explains thatemployers may choose to become self-insured. In order to make this type of insurance work, employers need to have significant funds to back any claims made by employees.
There are many benefits of choosing the self-insurance route, including the ability to pay costs as they are needed rather than up front. Administration can also be outsourced to a third party that will manage all details and coordinate services. Employers who choose this option can still apply for catastrophic policies that will kick in if a claim goes above a specified amount.
There are currently thousands of employers across the nation who operate with a self-insured worker’s compensation plan, but being eligible for this type of coverage requires approval by the state of California. Interested parties need to prove that they have the ability to qualify and meet specified standards in order to guarantee their employees’ safety on their own.