Many business owners automatically assume that they will need to provide workers’ compensation insurance for all employees. For some, that may be the case. However, there are alternatives to traditional insurance that may better serve your company’s needs. Keep reading to better understand your options.
You can think of a captive along the lines of a cooperative program. They are member-owned and -run, meaning you will have greater control over general decisions. Many are also industry-specific, so the coverage is tailored to business needs and actual risks instead of being pegged to a risk scale. A few of the other advantages of captive insurance include:
- Potential tax savings
- Long-term investment of reserve funds
- Increased effectiveness of risk management strategies
Some states allow businesses to assume financial responsibility for any injuries to workers. This is referred to as a self-funded policy. You will generally be required to demonstrate a strong financial position that would be able to cover any potential claims. Self-funded plans provide incentives to better manage risks, but they can also pose some problems. If a single large claim or multiple smaller ones in a short period of time would cause financial instability, this may not be a good choice for you.
It is vital that companies choose a worker’s compensation plan based on their specific needs and financial situation. Working with an agent who is knowledgeable about the laws and requirements in your state can help you find the best solution for your business.