Workers' Comp Alternatives for High-Risk Businesses
Options When Traditional Workers Comp Is Too Expensive
High-risk businesses like roofing, tree care, and trucking often face workers comp costs that strain the business. If traditional coverage is too expensive or hard to get, there are alternatives. From specialized PEOs to self-insurance options to captive programs, this guide covers the options available to high-risk businesses.
Alternatives for high-risk businesses
PEOs that welcome high-risk
Potential savings with the right PEO
To explore your alternatives
Key Workers Comp Factors
Specialized PEOs
Some PEOs specialize in high-risk industries and have group rating arrangements that price roofing, tree care, and trucking more competitively than standard carriers.
Self-Insured PEOs
Some PEOs are self-insured for workers comp, which means they can price high-risk business based on their own risk assessment rather than filed rates.
Captive Programs
For larger high-risk businesses, captive insurance programs allow you to essentially self-insure with risk sharing, which can lower long term cost.
High-Risk Deductible Plans
Some PEOs offer high deductible workers comp plans that lower your premium in exchange for retaining more of the small claim risk.
PEO Risk Pooling
Even high-risk businesses can benefit from PEO risk pooling. The PEO spreads your risk across a larger group, which can lower your effective rate.
Safety Investment
Investing in safety programs reduces claims over time, which lowers your EMOD and makes you more attractive to PEOs and carriers.
4 Workers Comp Alternatives for High-Risk Businesses
If traditional workers comp is too expensive or hard to get, high-risk businesses have four alternatives. First, specialized PEOs that welcome high-risk industries and have group rating arrangements for them. Second, self-insured PEOs that price based on their own risk assessment. Third, captive insurance programs for larger businesses. Fourth, high deductible plans that trade premium for retained risk. Each option has different requirements and tradeoffs.
- Specialized PEOs with group rating for high-risk industries
- Self-insured PEOs that price based on own risk assessment
- Captive insurance programs for larger high-risk businesses
- High deductible plans that lower premium for retained risk
- PEO risk pooling that spreads high-risk across a larger group
- Safety investment that reduces claims and improves insurability
Why a Specialized PEO Is Usually the Best Option
For most high-risk businesses, a specialized PEO is the best alternative. PEOs that focus on high-risk industries have group rating arrangements with carriers that understand the risk. They can price roofing, tree care, and trucking more competitively than standard carriers because they pool your payroll with other businesses in the same industry. They also handle claims administration, safety programs, and compliance, which reduces your burden. A broker who knows the high-risk market can find these PEOs and compare their pricing.
When to Consider a Captive Program Instead
For larger high-risk businesses with the cash flow to support it, a captive insurance program can be an alternative. A captive allows you to essentially self-insure your workers comp risk with risk sharing among a group of similar businesses. This can lower long term cost if your claims experience is better than the filed rates assume. But captives require significant premium volume, cash reserves, and multi year commitment. A broker can help you evaluate whether a captive makes sense for your business.
High-Risk Alternatives FAQ
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PEO Workers Comp Guides
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PEO Workers Comp Savings
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PEO Workers Comp for Contractors
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Workers Comp Experience Mod Explained
A plain English explanation of your experience modifier.
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Workers Comp Premium Reduction
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Pay-As-You-Go Workers Comp
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