What is required when a company wants to self-insure for workers compensation?

When a company decides to self-insure for workers' compensation, there is a requirement to provide a security bond. This bond acts as a financial guarantee to ensure that the company has sufficient funds to cover potential claims made by employees who may be injured or who become ill due to work-related incidents.

Self-insurance signifies that a company is taking on the responsibility to pay for workers' compensation claims rather than transferring that risk to an insurance carrier. By requiring a security bond, the state ensures that the company can meet its obligations to employees, providing an additional layer of protection for workers in the event that claims arise.

While obtaining a license from the state is also an important step in the self-insurance process, it is primarily to ensure that the company is qualified to self-insure. This does not replace the necessity of the financial security provided by the bond, which serves as a crucial financial safeguard.