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State Funds for Workers’ Compensation: Are They the Best Option for Your Business?

by | Feb 11, 2022

A Closer Look at State Funds

There’s a common misconception that many small to mid-sized companies should have their workers’ compensation insurance with the State Fund when, in reality, another insurance company might be a better option. So, why do so many businesses end up with the State Fund?

Why Businesses Choose State Funds

State Funds are often more lenient than private insurance companies when offering workers’ compensation coverage. They are more likely to accept businesses that:

  • Have less than two years of workers’ compensation history (newly formed businesses)
  • Have a less-than-stellar claims history
  • Operate in a high-risk industry

As a result, many businesses start with a State Fund because it’s the most accessible option. Insurance agents and agencies are more likely to turn to the State Fund for new businesses seeking coverage. However, after two or three years, it’s time to explore other options, which often doesn’t happen due to a lack of awareness or because agents find it more convenient to leave businesses with the State Fund.

Exploring Other Options: What’s Available?

Yes, there are other options! The State Funds of Idaho and Utah only account for a fraction of the workers’ compensation coverage sold. Dozens of regular insurance companies provide significant workers’ compensation coverage in both states. These private insurers can be more selective about the businesses they cover, but they often offer better coverage options and pricing for qualifying businesses.

When and Why to Shop for Other Options

If your business has been operating for over a couple of years and you have a good claims history, consider exploring alternative workers’ compensation coverage options. Private insurance companies are competing for your business, and they often provide more attractive offerings, including:

  • Lower rates
  • No deposit
  • Pay-as-you-go billing
  • Dividends
  • Extra discounts
  • Paperless processes
  • Simplified payroll reporting
  • Automated payroll reporting

These benefits can lead to a more streamlined and cost-effective insurance experience, making exploring alternatives to the State Fund worthwhile. Remember that insurance companies and State Funds are constantly changing and evolving. It’s essential to stay informed and work with a knowledgeable insurance agent who can help you evaluate and select the most suitable workers’ compensation coverage for your needs.

What About Other States Besides Idaho and Utah?

In some states, businesses must use a State Fund for workers’ compensation coverage. These states are known as monopolistic states, including North Dakota, Ohio, Washington, Wyoming, Puerto Rico, and the Virgin Islands. If your business is located in one of these states, your workers’ compensation coverage options may be limited. However, if you operate outside these states, you should actively explore and compare all available coverage options to ensure you get the best protection for your business.

Contact Page Insurance to Explore Your Options

Don’t let your business be stuck with suboptimal workers’ compensation coverage. The team at Page Insurance is here to help you explore all available options, including State Funds and private insurance companies. Our knowledgeable agents can help you identify the best coverage for your specific needs and risk profile, ensuring you receive the most comprehensive protection at the best possible price.


Ben Page, a Business Development specialist with over 20 years in the insurance industry, is an expert in Property & Casualty, Life, Health, and Disability insurance. Ben is licensed in all 50 states and dedicated to empowering clients with insider knowledge and making insurance more accessible. Passionate about client-centric service, he has helped build several successful insurance agencies. Ben enjoys Jeeps, Rock and Roll, cheese, movies, and spending time with his wife, three kids, and their golden doodle when not working.