As well as providing that employers will have limited liability for any employee work-related injuries, state workers’ compensation laws take steps to ensure that employers, as a practical matter, will meet their financial responsibilities for these injuries. The mechanism by which this is done is a requirement in the law that employers carry at least a minimum amount of workers’ compensation insurance. When employees are injured or killed on the job, their claims are then paid by the employer’s workers’ compensation insurance company. Most states make exceptions to this insurance requirement for very large employers or other employers that can prove to the satisfaction of the state that they will be able to cover potential workers’ compensation liability without insurance. These employers are referred to as self-insured, which simply means that they are responsible for paying any workers’ compensation expenses from their general assets. Often, as a condition for allowing an employer to be self-insured, the state may require the employer to place a significant amount of money into a trust fund, which can only be used to pay workers’ compensation expenses.
