Is It Best To Self-Insure Your Company Against Work Comp Claims?
If you own a business you must assess your risks to decide if self-insurance is the wisest way to save money and protect your business. As you may know, worker’s compensation insurance is required in all states. What you may not know is there are loopholes that will allow you to save on your insurance portfolio if you are willing to take on a higher level of risk. Excess workers compensation insurance is not for everyone. It is important to understand how this form of work comp protection will save you money and what you are responsible for when a claim is filed. Refer to the information below and decide if excess work comp is the right solution for your business.
What is Excess Worker’s Compensation Insurance?
Excess worker’s comp insurance is much different from a standard work comp insurance policy. When mid-sized businesses and large corporations choose to self insure their company against work comp claims, they can purchase an excess policy that is written to indemnify the employer when a claim exceeds a stated dollar amount. Excess policies will only pay when a certain dollar amount or cap has been reached. When the cap has been reached, the policy will cover all work comp losses up to a specified dollar amount unless the policy is unlimited.
Save Money on Your Insurance Without Taking on Too Much Risk
As a small business owner and a risk manager, it is your responsibility to assess just how much risk your company can take on without risking its financial health. While you hope you will never have to pay out a work comp claim, walking into self-insurance with the mentality that you will never pay out a claim is not wise. Most risk managers who choose self-insurance over conventional work comp insurance understand that the company does need some form of protection against catastrophic losses. Excess workers compensation will save you money while still offering reimbursement for catastrophic worker’s compensation claims.
Building a Policy Customized to Meet Your Company’s Needs
Most workers compensation excess insurers do have strict underwriting guidelines. They will want proof that you have the resources to pay your smaller work comp claims. When you choose the right insurer, you have the option to choose how much you want to be liable for any given claim. Once this limit is reached, you can select how much the insurer will pay out until maximum limits are reached. If you are willing to pay higher premiums, you can choose an unlimited payout limit once you meet the agreed payout limit on the policy.
Worker’s compensation insurance is not cheap. When you have several employees and a high payroll, you can expect to pay a small fortune for coverage. If you are willing to take on more risk, consider the benefits of investing in excess workers compensation insurance. Calculate the cost for coverage and the amount you can expect to payout to see if it will save you long-term.
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