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Criteria for workers’ compensation self-insurance in New York

Workers’ compensation is required for all employers in New York; however, not all companies choose to use the State Insurance Fund. Some will opt to pursue self-insurance instead. This is a viable option for many because it may be less costly, which is important since employers can’t pass along the cost of workers’ compensation coverage to the employees.

There are several criteria to meet if you’re going to attempt to self-insure. Ensuring that you meet these before you apply for self-insurance is important. These include:

  • Being in business for three years in a form recognized by the government
  • Not having any outstanding compliance or procedural penalties
  • Having a tangible net worth that’s greater than seven time of either the three-year average annual premium or gross claim payment, whichever is greater
  • Maintaining a safety program to prevent accidents
  • Having an S&P rating of A- or higher, a Moody’s rating of A3 or greater or an alternative equivalent

You also have to show that you have current workers’ compensation coverage when you apply. If you’re approved for self-insurance, you’ll have to follow the steps outlined in the approval. This includes putting up the security deposit, which is $1,457,000 as of July 1, 2019. You’re also subjected to annual reporting to verify that your company still meets the requirements for self-insuring.

When your company is self-insured, it is up to you to ensure that any claims for on-the-job injuries are handled properly. There may be instances in which you reasonably believe that something is amiss. Defending your company against these claims is critical because the outcome can impact the profits for the applicable period.

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