State funds, monopolistic states, and self-insurance
The different ways to meet your coverage duty, from private policies to state funds and self-insured programs.
Last reviewed October 29, 2026
Your options
Depending on your state, you can meet your coverage duty in one of these ways:
- Buy a policy from a private insurer.
- Buy from a competitive state fund that sells next to private insurers.
- Buy from a monopolistic state fund, where it is the only seller.
- Get state approval to self-insure, alone or in a group.
Competitive state funds
Many states run a state fund that competes with private insurers. Examples include California's State Compensation Insurance Fund and the New York State Insurance Fund. These funds often serve as the insurer of last resort for businesses that private insurers turn down.
Monopolistic states
North Dakota, Ohio, Washington, and Wyoming do not let private insurers sell standard workers' comp. Employers buy from the state agency: Workforce Safety & Insurance in North Dakota, the Bureau of Workers' Compensation in Ohio, the Department of Labor & Industries in Washington, and the Department of Workforce Services in Wyoming. Ohio and Washington also allow approved self-insurance.
These state policies may not include the employer's liability protection found in a standard policy. Many employers buy a separate "stop gap" policy from a private insurer. If you have workers in other states, you may need a private policy for those states too.
Self-insurance
Self-insured employers pay claims with their own money instead of buying a policy. States require strong finances and a security deposit, and some set a minimum size. For example, Texas requires evidence of at least $500,000 in unmodified premium, a $1,000 application fee, and a security deposit. California's Office of Self-Insurance Plans reviews financial strength and claim handling before it approves a new employer. Self-insurance usually makes sense only for large, stable businesses.
Group self-insurance
Some states let businesses in the same industry pool together in a group self-insurance fund. Members share the risk, and in many states they also share liability if the group runs short. Read the agreement carefully before you join.
Official resources
California Department of Insurance: workers compensation guide for employersTexas Department of Insurance: employer FAQWashington L&I: out-of-state employers and out-of-state workersCalifornia Office of Self-Insurance Plans: prerequisites and requirementsNew York WCB: individual self-insuranceNorth Dakota WSI: employersEducational information, not legal advice. Confirm state-specific requirements with the relevant agency.