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 $ 1 million 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.