Self-insured employers have to determine how much of the risk of self-insurance they are willing to accept ( their Self-Insured Retention -- S.I.R.) on their own. In many situations; the selection process is determined by the insurance market. Most policies require a minimum of a $ 350,000 S.I.R.( in construction or trucking a $ 500,000 S.I.R.) and unfortunately; in some instances excess insurance is not available at any( reasonable) cost. Employers considering self-insurance for the first time should take this into consideration and determine availability and cost BEFORE selecting self-insurance as an alternative.
The preferred level of Workers' Compensation coverage is for STATUTORY Coverage. This coverage offers unlimited benefits as allowed by statute. Stated Limits Coverage provide a policy limit ; usually $ 10 to $ 25 million.
Most employers purchase liability insurance ( Employer's Liability Insurance with a $ 1million limit) along with Workers' Compensation Insurance to provide coverage in the event that the injured employee claims that the employer was grossly negligent ( Intentional Act, Intentional Tort or a Substantial Certainty). Additional coverage may be picked up by their Commercial Umbrella policy over and above the stated policy limit.
- Employers will then purchase an insurance policy that will indemnify them in the event their employee suffers a catastrophic job related injury that exceeds their S.I.R.
- Coverage is written on a PER ACCIDENT basis -- statute does not permit aggregate stop loss.
- Employers will then purchase coverage above their Self-Insured Retention ( SIR ) on a per accident basis for both Workers' Compensation and Employer's Liability.