The Difference Between Guaranteed Cost and Self-Insured Workers’ Compensation

In theory, workers’ compensation should be a simple matter: an employer pays into a policy so that when a worker is injured on the job, medical costs and liabilities are covered. In reality, employers in non-monopolistic states have a choice between guaranteed cost and self-insured workers’ compensation. Here is the difference between the two.

Self-Insured Group Workers’ Compensation

To be self-insured means that rather than purchasing an insurance policy, your company sets aside money to pay medical bills for workers injured on the job. Having a group policy means that you join forces financially with other employers to provide coverage. The following are some benefits of a self-insured group policy:

Guaranteed Cost Workers’ Compensation

A guaranteed cost policy is one for which the premium does not go up or down based on the number of claims. Here are two main benefits of a flat-rate policy for workers’ compensation:

  • You have a predictable monthly premium.
  • You do not have to shoulder the financial burden of employers in your group who refuse to pay their share.

Only you can determine which option is right for your workers. Talk to your insurance agent today about making an informed decision about workers’ compensation policies.