What do you do when you can’t find workers’ comp coverage?
New businesses, businesses in higher risk industries, and businesses with a history of claims may sometimes have a very hard time obtaining workers’ compensation policies. What are these businesses to do when they have run out of options in the standard market and can’t find workers’ comp coverage?
There are usually two options – either using a state funded workers’ comp program, or using a PEO/Employee Leasing Company. Let’s discuss the pros and cons of both.
State Funded Workers’ Compensation Programs
According to insureon.com, 22 states have their own competitive Workers’ Comp fund and in a handful of states, you can ONLY purchase Workers’ Comp through the state’s monopolistic fund. Many consider state funds a last resort due to the surcharges, penalties, fees and audits they impose on a business. In some states, the rates of the fund are competitive, however, private insurers are usually more affordable.
PEOs/Employee Leasing Companies
A Professional Employer Organization, also known as an employee leasing company, becomes a business’s strategic partner, or co-employer, for the purposes of providing workers’ compensation coverage, payroll processing, and human resource assistance. A PEO assumes the workers’ comp risk and liability under their umbrella. They offer competitive programs, provide timely certificates of insurance, and eliminate pre-payment and audits. You will retain ownership of the company and control over its operations. You continue to do the hiring, firing, setting the wages and handling the day to day activities. This option allows you to outsource a great amount of administrative tasks, which allows you to spend time growing your business.
If you are a small business who has had trouble securing workers’ compensation coverage, we may have an affordable PEO option for you. Contact us today for a free quote!