The most common way to purchase workers' comp coverage is through your insurance company. It will review your business and create a policy based on your industry and prior claims history. It can also offer coverage for general liability insurance and protection from natural disasters.

Assigned risk funds
If your business is high risk or your state requires it, you may have to get workers' comp insurance through a state-operated assigned risk fund (or monopoly state fund).

An assigned risk fund lumps together multiple businesses from similar industries that can’t get workers comp. This allows businesses to pool their losses. State officials typically manage the fund and pay out claims. Policies purchased through assigned risk funds are typically more expensive than private insurance policies, but they may be the only way certain companies can get the required coverage.

Self-insurance
Large, private companies with significant cash flow can elect to pay the true costs of claims through self-insurance. Instead of paying premiums on a policy, you would pay the benefits directly when claims are filed.

To qualify for self-insurance, you need several hundred thousand dollars for a security deposit, and millions of dollars in excess insurance coverage. But companies that can afford it would experience significant cost savings – self-insurance costs about five to ten cents for every dollar in payroll vs. forty-five to fifty cents for every dollar in payroll through private insurance.

Your state insurance board requires self-insured prospects to submit their business financials in order to get certified. You also must maintain in-house staff to manage and administer claims. Keep in mind that being self-insured means you absorb full responsibility for claims, including large accidents that injure multiple employees.

If the requirements for self-insurance appear steep, a self-insurance group allows you to pool your resources with other large private businesses to provide similar benefits. Check with your local insurance board to see if self-insurance groups are permissible in your state.