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Do Businesses Need Excess Workers’ Compensation Insurance?

Workers’ Compensation Insurance

Do Businesses Need Excess Workers’ Compensation Insurance?

Workers’ compensation insurance protects your business both financially and legally in the event of workplace accidents and injuries, and related lawsuits. It pays for injured employees’ hospital expenses, lost wages, ongoing care costs, disability expenses, and death benefits (in fatal incidents). However, what if your workers’ compensation insurance falls short of covering your work-related liabilities and claims? This is where you should consider buying excess worker’s compensation insurance.

What Is Excess Workers’ Compensation Insurance?

Excess workers’ compensation insurance helps protect the self-insured employer against work-related incidents that exceed their workers’ compensation policy limits. Mostly, businesses that operate with a limited budget opt for this policy, as it provides extended coverage for workplace injuries. So they don’t have to worry about the expensive claims that could wreak havoc on their finances.

Excess workers’ compensation insurance features two categories:

  • Specific Coverage – Puts a pre-specified cap on the losses the policyholder has to pay for the single claim, thus controlling the severity of losses.
  • Aggregate Coverage – Provides coverage as soon as you reach a cumulative per-occurrence loss limit, thus minimizing the loss frequency.

Reasons Businesses Need Excess Workers’ Compensation Insurance

Businesses, especially smaller firms or start-ups, must have excess workers’ compensation insurance, as it provides substantial benefits to protect their liability and out-of-pocket expenses, which include:

  • Provides flexible coverage for self-insurers.
  • Helps to manage claims of devastating workplace incidents.
  • Minimizes the costs associated with conventional workers’ compensation insurance policies.
  • Effectively controls and manages workplace hazards.

What Are the Challenges Faced by Excess Workers’ Compensation Insurance Underwriters?

Excess workers’ compensation insurance is helpful for businesses that would like to self-insure their workers’ compensation coverage. However, underwriters face significant challenges in writing excess workers’ compensation insurance.

  • Only some underwriters provide excess workers’ compensation insurance coverage as a separate policy. This is because devastating workplace injuries and death claims may remain open for decades, wasting the insurance company’s time and money.
  • Underwriters are forced to raise the cost of excess worker’s compensation policies because of the increasing expenses resulting from increased Medicare set-aside requirements and employees’ health or fitness issues, such as obesity or chronic health conditions.
  • To continue writing excess worker’s compensation policies, underwriters have to have their clients assume greater retentions to reduce high-risk claims.

From buyers’ perspective, increased expenses make them deny coverage. However, insurance providers are working to optimize the coverage and its expenses so that buyers can comfortably pay for excess workers’ compensation insurance.

Businesses with high-risk exposures, such as agriculture firms, construction companies, and manufacturing industries, can opt for excess workers’ compensation insurance to protect their employees with sufficient coverage. With excess coverage in place, you can raise above and beyond limitations without having to worry about costly claims and civil litigation.

Cover Your Business Against Workplace Mishaps with Remland Insurance

At Remland Insurance Services, Inc., we offer an all-inclusive workers’ compensation policy that compensates your injured employees and protects your business from related liabilities and lawsuits. Contact our insurance professionals today to find the best policy to protect your employees and business.


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