If an employer self-insures their workers' compensation risks, what type of coverage should they purchase to cover claims exceeding their self-insured limits?

When an employer chooses to self-insure their workers' compensation risks, they retain the financial responsibility for managing claims up to a certain threshold. However, to protect themselves from catastrophic losses that could exceed their self-insured retention limits, they should purchase excess coverage. This type of insurance comes into play when the claims surpass the predetermined limit set by the self-insured retention. Essentially, excess coverage acts as a safety net, ensuring that if claims exceed the self-insured amount, the excess insurer will then cover the additional costs.

General liability coverage is focused on claims related to bodily injury or property damage that occurs on the business premises or as a result of business operations, which does not directly cover workers' compensation claims. Workers' compensation coverage itself is typically intended for employers who do not self-insure, ensuring that employers can fulfill their obligations to injured workers. Umbrella insurance provides broader coverage but is typically designed to extend liability limits and is not specifically tailored to cover workers' compensation claims that exceed self-insured limits. Thus, for an employer who self-insures their workers' compensation, excess coverage is specifically designed to address and manage higher claims beyond their retention limit.