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Is It Possible for New Jersey Employers to Self-Insure for Workers’ Compensation?
The short answer is yes; however, the decision is made by the Department of Banking & Insurance. Approval depends on an employer’s ability to show that it has enough assets to cover all possible claims for work-related injuries. If the commissioner of insurance is satisfied with an employer’s financials and the permanence of the business, he shall exempt the employer from insuring all or any part of its compensation liability.
However, if the commissioner is not satisfied with an employer’s financial ability and permanence, he may consider the following as evidence of ability to pay:
1) a guaranty by a parent corporation that it will discharge the employer’s liability;
2) a separate account or reserve fund that is maintained by an employer to discharge its liability;
3) a surety bond executed by an association or corporation licensed to do business in New Jersey, provided the surety undertakes to discharge the employer’s liability; or
4) a contract of an employer with an insurance carrier covering liability for a portion of the compensation.
A New Jersey workers’ compensation attorney may be able to help you regarding possible evidence needed.
The commissioner may periodically require any exempted employer to furnish additional statements of financial ability, and if it appears to him that the employer is no longer able to carry the risk of compensation liability, he shall revoke his order granting exemption. For assistance from a New Jersey workers’ compensation attorney, call Dan T. Matrafajlo at (908) 248-4404 for a free evaluation of your situation.