Monopolistic workers’ compensation. It sounds like a board game. Except it’s likely a bit more complicated and probably less fun.
But that’s OK. Owning and operating a business isn’t always fun, as you probably well know. Often there are challenges to overcome. And to overcome them, you first need to understand them.
The good news is we’re here to help. Especially when it comes to understanding how monopolistic workers’ compensation affects insurance coverage.
So let’s get to it. In this article, we’ll guide you through what you need to know about monopolistic workers’ comp, including the states where it applies, and the insurance coverage you may or may not get with it.
Here we go.
What Is a Monopolistic State for Workers’ Compensation?
To better understand what monopolistic workers’ compensation means to you and your business, let’s first start with some definitions.
What are monopolistic states?
This is a state that mandates employers purchase workers’ compensation insurance from that state’s workers’ compensation program.
What are monopolistic insurance funds?
This is the fund the state creates and manages to pay workers’ compensation benefits.
What Does Working in Monopolistic States Mean for Employers?
In monopolistic states, there’s no open market for workers’ comp insurance. If you’re a business owner, that means you can’t get workers’ comp insurance through private companies. Instead, you must purchase workers’ compensation insurance from the government-owned and operated fund in that state.
Some monopolistic states (Ohio and Washington) do offer some companies the ability to self-insure, but there are strict requirements to qualify.
What is “self-insurance”?
You might be wondering what “self-insurance” means. Simply, it’s when an employer puts money aside to cover potential workers’ comp claims. There are often stringent requirements for self-insuring employers, and not all states allow it.
If you live in Ohio, the Ohio Bureau of Workers’ Compensation will advise you of the requirements you must meet to qualify for self-insurance. In Washington, self-insurance rules and qualifications can be found here.
Legal protection for your business.
While monopolistic states require you to purchase workers’ comp through their programs, it’s not always the same as coverage you might be able to find from many commercially available policies.
There are essentially two parts to traditional workers’ comp policies:
- Coverage that provides benefits to workers who become ill or are injured on the job.
- Coverage that can cover an employer’s costs and claims if they are sued by an injured employee.
The workers’ comp insurance available in monopolistic states generally covers only item 1 above.
This obviously can create liability risks for you, exposing you to potentially devastating financial loss if an employee sues you as the result of an injury or illness that occurred on the job.
For example, let’s say you run a painting business in Wyoming — one of four monopolistic states. The ladder lock on one of your extension ladders is broken.
You’ve been meaning to repair or replace that ladder for a couple of weeks, but it’s been so busy you haven’t gotten around to it. Plus, your crew has been manually locking it into place, so fixing the problem right away hasn’t been a priority. Except on the day one of the painters forgot to lock it, and the ladder went down, taking the painter with it. He survived the fall but broke his leg and will miss work for a number of weeks or longer.
As an employer in a monopolistic state, there’s good news and bad news in this type of scenario.
The good news is that if you have monopolistic workers’ comp insurance, your employee will receive some level of compensation for medical expenses and lost wages.
The bad news is if the employee feels that workers’ comp doesn’t adequately cover his loss — and that your knowledge of broken equipment and negligence in fixing it caused his injury — he may decide to sue you. If he does, you may not be protected under your state’s monopolistic workers’ compensation insurance program.
Understanding insurance.
We get it. Insurance can be a complex subject that seems to come with its own foreign language.
What’s more, there are different types of coverages and policies that you may or may not need for your type of business.
That’s where we come in. At Simply Business, we make finding insurance for your business needs as simple as possible. From general liability insurance to workers’ compensation insurance, we’ll help find policies so you have peace of mind and can focus on what matters — running your business.
Spend a few minutes with our handy quote tool, and we’ll get to work looking for quotes from respected insurers. Then all you have to do is choose the one that’s best for you.
Or if you want to talk to a helpful human (one of our licensed insurance agents, you can give us a call at 855-930-2844. We’re here Monday-Friday, 8 a.m. to 8 p.m. (ET). We’ll work hard to answer all your questions and help you get the protection you need for your business.
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What Are the 4 Monopolistic States for Workers’ Comp Insurance?
There currently are four monopolistic states:
- Wyoming
- Ohio
- Washington
- North Dakota
Is Wyoming a monopolistic state for workers’ compensation?
Yes. Wyoming is a monopolistic state with a state-controlled workers’ compensation plan. Private workers’ comp insurance is not allowed. Instead, workers’ compensation coverage may be purchased only from the fund.
The fund is controlled by the Wyoming Workers’ Safety and Compensation Division.
For contact information — and to learn what you’ll need to complete an application — click here.
More detailed information on the Wyoming workers’ compensation system can be found on the Wyoming State Work Comp Rules and Laws page.
Is Ohio a monopolistic state for workers’ compensation?
Yes. Ohio also is a monopolistic state. Purchasing workers’ compensation insurance must be done through its state-controlled workers’ compensation plan.
The fund is governed by a board of directors appointed by the governor, and it’s regulated by the state legislature. What that means for you (if you own and operate a business in Ohio) is you pay the premium. The premium you pay is collected and held in the State Insurance Fund. The fund pays claim costs when necessary.
If you have one or more employees in Ohio, you’ll need workers’ comp coverage.
Contact:
Bureau of Workers’ Compensation
30 W. Spring St.
Columbus, OH 43215-2256
Phone: 1-800-644-6292
Fax: 1-877-520-6446
More detailed information on the Ohio workers’ compensation system can be found on the Ohio State Work Comp Rules and Laws page.
Is Washington a monopolistic state for workers’ compensation?
Yes. Washington is one of the four monopolistic states. The Department of Labor and Industries monitors and oversees the actions and decisions of its own insurance operation called the “state fund.”
For contact information — and to learn what you’ll need to complete an application — click here.
More detailed information on Washington’s workers’ compensation system can be found on the Washington Work Comp Rules and Law page.
Is North Dakota a monopolistic state for workers’ compensation?
Yes. Like Ohio, Wyoming, and Washington, North Dakota is a monopolistic state, meaning it has a state-controlled workers’ compensation plan.
The Workmen’s Compensation Bureau, which was created by the North Dakota Legislative Assembly, controls the fund.
Employers and employees can get more information here.
Is Oregon a monopolistic state for workers’ compensation?
No. Oregon is not a monopolistic state. You’re free to shop around for a comprehensive insurance policy that bundles both general liability and workers’ compensation insurance. That way your employees are covered. And you are, too.
Is Texas a monopolistic state for workers’ compensation?
No. Texas is not a monopolistic state. It’s also the only state that does not require employers to have workers’ compensation insurance.
Is Montana a monopolistic state for workers’ compensation?
Montana is not a monopolistic state. For general liability and workers’ compensation insurance, you’re free to find a policy that best serves your business needs.
Is Idaho a monopolistic state for workers’ compensation?
No. Like its Big Sky neighbor to the east, Idaho is not a monopolistic state.
Safety First
The health and well-being of your small business can often depend on the health and well-being of your employees. That’s why understanding workers’ compensation can be so important — whether you live in a monopolistic state or not.
We’re here to help with workers’ comp and many other aspects of running your business, including articles with advice on keeping both your employees and your business safe. Check out these articles on securing a construction site, avoiding lawsuits, and improving employee safety in the workplace.
We’re always looking for ways to keep you informed. Because safety is the best policy.
We’ve got more on workers’ comp…
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Workers Compensation Insurance: How to Know When You Need It
Is Workers Compensation Insurance a Requirement?
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Do I Need Workers Compensation Insurance?
Which Businesses Need Workers’ Comp Insurance? Important Info You Need to Know