Business owners in New York are required to provide workers’ compensation, disability and paid family leave to their employees. Sometimes, the cost of those insurance benefits is much too high for the business to handle. This is where self-insuring your business might be a good choice for your company.
The caveat, however, is that the state of New York considers self-insurance to be a privilege. Business owners who wish to self-insure must apply for this privilege with the state.
Setting up self-insurance
When your business is approved for self-insurance, you will need to make the following security deposits:
- $1,658,000 for workers’ compensation
- $10,000 for disability claims
- $11,000 for paid family leave
These deposits will be used to ensure that payment is available for claims made against the business, should the business default on its payment to the person making the claim.
Advantages to self-insurance
Some of the advantages to self-insuring your business are as follows:
- You will not have to deal with the cost of increasing insurance premiums from outside insurers.
- Your business will save money when claims are not made and you won’t have a yearly premium to pay to your insurance provider. When a claim is made, you will be able to draw on your funds and won’t be penalized with a higher insurance premium.
- Businesses that self-insure are more aware of the risks they face, thus ensuring that they will go above and beyond to keep the workplace safe.
There are also some disadvantages to consider. If you do not prepare ahead of time by reducing workplace risks, you could find your business owing a lot more on a claim than you are prepared to pay. Therefore, it is wise to acquire some experienced legal guidance when you are dealing with self-insurance issues.