As an employer, being eligible for workers' compensation insurance can be problematic. Since most employers are obligated by law to cover their workers for workplace-related injuries or illnesses, it is important to know alternative ways to insure your workers if you cannot afford or obtain coverage from insurance companies. If you are in such a situation, a great option you can pursue is to enter an "assigned risk plan." This article will seek to explain what an assigned risk plan is and which employers could be suited for it.
What is an assigned risk plan?
Employers are sometimes unable to meet eligibility requirements for workers' compensation coverage offered by standard market insurance companies for a number of reasons that increase their risk, in which case they can join a "pool" insurance plan provided by their individual state to ensure they meet statutory requirements for workplace coverage. There are a number of reasons why an employer may find themselves in an assigned risk plan. Here is a look at two common ones.
New businesses and small employers
Many standard market insurers often refuse to offer a workplace insurance coverage to new businesses that lack a satisfactory loss experience history. Owners of such businesses are often left with no option but to join an assigned risk plan to ensure they cover their employers against workplace related risks. This will allow their business to stay in operation for long enough to generate enough records for a standard insurance carrier to rate their risk history and thus accept them into a standard worker's compensation plan.
Small businesses that employ a small number of employees may also find that their workers' compensation insurance premiums are lower than what standard insurers will accept, forcing them to rely on an assigned risk plan to cover their workers. Employers whose loss records are no longer acceptable to standard insurers due to high workplace-related injury claims may also have to enter an assigned risk plan.
For businesses whose operations fall within a high-risk industry such as roofing, farming, heavy manufacturing and construction, obtaining workers' compensation insurance from standard insurance may be daunting, as these carriers are often reluctant to insure against such high risk. Such employers may be placed in an assigned risk plan by their state before they can lower their business risk to an acceptable level, implementing a satisfactory risk management program.
An assigned risk plan is typically designed to help businesses with poor payment or loss records, or start-ups whose risk cannot yet be assessed, obtain workers' compensation coverage temporarily until they can either improve their loss record or reduce their business risk so as to be accepted by standard insurers. An professional attorney, like those at the Law Office of Leslie S. Shaw, can also help you as you search and petition for adequate coverage for your employees.Share