Are employers required to have workers’ compensation insurance?

Some occupations have higher risks of accidents and injuries than others. Fortunately, employees could feel safe knowing they can seek workers’ compensation after a workplace injury. However, some employers might not have workers’ compensation insurance.

In New Jersey, the law requires all employers within the state to offer insurance coverage for their workers and employees, including the following entities:

  • Corporations
  • Partnerships or limited liability companies
  • Sole proprietorships
  • Government agencies

The requirement could vary based on financial considerations and whether they are self-insured. Most organizations could gain coverage through self-insurance instead of workers’ compensation. However, they need approval from the Commissioner of the Department of Banking and Insurance before implementing alternative insurance options.

How does self-insurance work?

Employers could qualify for this option based on the company’s financial status and stability. Local policies have provisions setting standards considering the employer’s financial obligations and business permanence before receiving approval.

After receiving approval, they could implement an in-house workers’ compensation claims option or acquire services from a qualified third-party administrator. Employers could find a legitimate provider by checking New Jersey’s list of licensed insurance companies offering workers’ compensation coverage.

Failure to have insurance coverage

Employers must offer some form of insurance coverage according to the law. They have multiple options, depending on their business qualifications and circumstances. Failing to meet this condition is an offense under New Jersey law. The penalties for this violation could include subsequent fines and other civil sanctions.

These safeguards are in place to protect workers and employees who could face occupational hazards regularly. Anyone could help address noncompliance by reporting uninsured employers to the Office of Special Compensation Funds.