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The Advanced Insurance Management
Online Guide to Workers Compensation Insurance for Employers


Workers' Compensation is regulated by each state, and the rules regarding this business obligation can vary significantly from one state to another.

Most states utilize a system where employers purchase insurance from insurance companies to meet this statutory obligation, but some states, like California and New York, maintain a state-run fund that competes with private insurance.


And a few jurisdictions, Ohio, Washington, Wyoming, North Dakota, Puerto Rico, and the U.S. Virgin Islands, require employers to use only their state fund and do not allow private insurance.


If your company purchases Workers' Compensation insurance, from either an insurance company or a competitive state fund, your premium is calculated according to a certain format.

Some of the fine details of that format can vary from state to state, but there is also a considerable degree of uniformity from state to state regarding how premiums are calculated.

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Each state sets its own rules about Workers Compensation coverage and about when employers are required to get WC coverage.

In some states, an employer needs to have more than a couple of workers before mandatory coverage is imposed. In other states, as soon as a business has any workers other than the sole proprietor or the partners, Workers Comp coverage is required.



Workers Compensation is a specialized form of insurance that is explicitly designed to insure whatever the employer's statutory liability is under a particular state's Workers Compensation Act.

No other policy can satisfy an employer's obligations under a state's Workers Compensation Act, not General Liability, not an Umbrella Liability policy.


A few states have created exceptions to this, allowing employers to meet statutory requirements if they can cobble together an "equivalent" coverage package from other kinds of insurance, but this can be a trap for employers--if the alternative program is found by a court to not really provide the same benefits as a Workers Comp policy, the employer can be held liable for really serious financial damages.


And many states are stepping up their enforcement activities over mandated WC coverage, and applying significant penalties to employers they catch who don't carry approved WC coverage when the law says they must.


In a lot of states, small employers or new employers almost invariably end up insured through some kind of state-sponsored "insurer of last resort". For states that maintain a state fund, these funds are that "last resort" source of WC coverage.

In states without a state fund, the insurer of last resort is something called an Assigned Risk Plan--which is a pooling mechanism, often run by the insurance trade organization called the National Council on Compensation Insurance, or NCCI.

Often it can be difficult for an employer to easily spot if a Workers Comp policy is an Assigned Risk policy, because it looks pretty much the same as a regular WC insurance policy, issued by an insurance company.


But a policy from a "last resort" source, such as an Assigned Risk Plan, almost always has significantly higher rates and premiums than the same coverage would cost in the so-called "Voluntary Market" (which just means a policy voluntarily written by an insurer outside of the "last resort" mechanism.


We've included on our website a number of pages containing information about the details of Workers Compensation insurance:

All About Workers' Comp

The Basics of Workers' Compensation Premium Calculation

Glossary of Workers' Compensation Terminology

Classification Codes

Experience Modification Factors

Prepare for Your Audit

Payroll & Other Remuneration Defined

Warning Signs of WC Overcharges

Worker's Compensation in Illinois

Precision Machining & Workers Comp

Contractors & Workers' Comp

Staffing Companies

Small Or New Businesses

Premium Disputes

Choosing an insurance agent

Why Workers Comp Overcharges Are So Common

Rating Bureaus

We also have a state by state directory of insurance regulators

and information about insurance industry professional designations

Advanced Insurance Management helps employers reduce Workers Compensation insurance premium audits, classifications and experience modifiers, double checking technical issues that directly affect the premium charges made by insurance companies.

    Contact Us   

We don't sell Workers Compensation insurance. We're not insurance agents or brokers. Instead, we help employers reduce their Workers Compensation insurance premiums by correcting technical mistakes by insurance companies and rating bureaus..

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Going into shock over your latest Workers Comp Premium Audit? We may be able to help.


How We Can Help You

you can also listen to an audio interview about our work.


Consultants on Workers Comp Classification Codes, Experience Modifiers, Payroll Audits, & More

We've been helping employers since 1987, making Advanced Insurance Management one of the oldest and most experienced firms in the field of premium recovery.


Advanced Insurance Management BBB® Accredited Business SealBBB® Accredited A+ Rating
  • Advanced Insurance Management LLC
  • 3230 South Harlem Avenue,  Suite 203
  • Riverside, IL 60546
  • contact us:phone: 800-288-9256
  • e-mail:aim@cutcomp.com