Every business owner needs workers' compensation insurance, but those with a choice should understand and consider all their options.
Diane Test, a workers' compensation administrator with the George Petersen Insurance Agency in Santa Rosa, California, stresses the diversity of options available state-to-state.
While state fund insurance is an attractive option for small business in the Golden State, those in Washington have no other providers, she explains. However, in other states like Florida, trade association plans offer an attractive alternative to state or private fund workers' compensation insurance.
Test says that small-business owners should invest time in researching and comparing the different providers available in their states.
She uses her knowledge of California's options to demonstrate the advantage of some options over others.
"There are a lot of advantages to state funds (in California) because they're so large," she says.
Their size allows the state fund to offer a level of guidance and handholding that private underwriters do not, even though private premiums might prove lower.
In some cases, Test adds, new firms have difficulty finding private companies willing to insure them because the do not have an established "run record" or accident history, good or bad.
State funds not only insure such companies, but also help teach new owners the workers' compensation basics.~
"For new companies it's a positive experience," she says.
Small-business owners in Florida, however, do not always enjoy such experiences with their state fund.
Melanie Valeriano is an underwriter for the Tallahassee-based Florida United Business Association, which provides members with workers' compensation insurance through a self-insurance fund.
She explains that the Florida Joint Underwriter Assigned Risk Program is often viewed in a very different light than its California counterpart.
"It's a last resort type of market," says Valeriano. "Premiums are as much as three times higher."
And, in many cases the JUA requires 150 percent of the premium up front, she adds.
Florida state law allows business owners to band together and self-insure, but only if there is commonality. Associations like FUBA offer larger groups of small-business owner that commonality and the favorable insurance arrangement that goes along with it.
Valeriano estimates that as many as 90 percent of the firms insured by the association have three or less employees, or are new.
She is quick to point out that FUBA also provides members with a lobbying voice at the state capital in Tallahassee, as well as up-to-date information on government policy changes that affect them.
"The association keeps you up to date on the regulations so members get that side of it. For the small-business owners who can't keep up (with the changes), that's the advantage over other funds," says Valeriano.
Association funds are not available to all small-business owners, but for those in states that allow such arraignments they are an option worth exploring. And at the very lease, knowing what's available provides a path to the best choice for any situation.
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