What is self-insurance?

In New Jersey, employers must have worker’s compensation insurance. The insurance covers accident and injuries that employees and suffer in the course of their employment. Employers may obtain the insurance by purchasing a worker’s compensation insurance policy or having self-insurance. When an employer opts to have self-insurance coverage, it assume the financial risk and responsibility of a employee work accident and resulting injuries. Therefore, the employer pays out-out-of-pocket for the medical and wage benefits to the injured employee.

An employer must get approval from the New Jersey Commissioner of the Department of Banking and Insurance to have worker’s compensation self-insurance. Upon submission of an application, review and approval is determined by that financial ability of the employer to meet the obligations of worker’s compensation under the law. As a self-insurer, the employer may choose to handle the worker’s compensation claims itself or contract a third-party administrator to review them.