16.13 Other Sources of Coverage

Assigned Risk Plan (Residual Market Plan)

Many states provide a Workers’ Compensation Assigned Risk Plan for employers who cannot obtain coverage in the voluntary market. Insurers that write Workers’ Compensation insurance in the state are typically required to participate in the assigned risk plan.

Some states use state funds instead of assigned risk plans. Employers can purchase Workers’ Compensation coverage directly from the state fund, and licensed brokers may place coverage through the fund.

Self-Insurance Plans and Employer Groups

Except for North Dakota and Wyoming, most states allow employers to self-insure if they meet statutory financial requirements demonstrating they can fulfill Workers’ Compensation obligations. Self-insurance is often attractive to large employers because losses are more predictable and benefits are limited by state law.

Employers that self-insure must obtain a self-insurance certificate. They may also purchase excess insurance or reinsurance, and some states require them to obtain a surety bond.