If you suffer an injury at work, you will usually expect to go through the workers’ compensation system. Your employer’s insurer will review your claim and issue benefits.
In some cases, though, your employer may not have an insurer. The Pennsylvania Department of Labor & Industry explains employers do have the option to self-insure for workers’ compensation.
To self-insure, an employer must get authorization from the Department. It would have to show the company has the financial means to cover benefit payouts. The Department also requires proof of a program covering illness and accident prevention. The employer also must make sure it can post a bond of some type to secure its self-insurance.
In determining the financial wellness of the employer, the Department will make sure it can cover the basic liability for workers’ compensation and an additional amount based on calculations of loss. In general, the Department wants to see the employer will have enough on hand to cover even the greatest workers’ compensation claim.
In approving an employer to self-insure, the Department wants to be sure the employer will be able to cover any and all claims for workers’ compensation. It must be able to provide the security to workers that it would through a traditional insurance program. In addition, the Department wants to ensure the employer can maintain this self-insurance for the long term.
Self-insured employers do exist, but the process to get approval for self-insuring is not easy. If your employer tells you it operates under self-insurance, you should still check to see if it is approved by the Department of Labor & Industry. If it is not, then your employer is not legally covered for workers’ compensation.