There are two ways employers can provide industrial insurance coverage: by insuring with the state industrial insurance fund (State Fund) or by qualifying to self-insure.

The State Fund

Employers insuring with the state industrial insurance fund are assigned a classification or classifications based upon the level of risk to which their workers are exposed. These employers pay premiums into the accident and medical aid funds, the amounts of which are determined by their injury cost experience and their industry classification. Employees of State Fund employers share the cost of the medical aid premiums and the supplemental pension fund.

Self-Insurance

Under self-insurance, a firm that qualifies and is certified by Labor & Industries, assumes the responsibility of providing all benefits and compensation directly to its employees who are injured. Employees of a self-insured company are not required to contribute to the medical aid fund.

Self-insured firms provide benefits as specified by law directly from their corporate funds. Employees of self-insured companies are accorded the same rights and guarantees as are workers of employers who insure with the State Fund.

By law, self-insurance requires that an employer demonstrate sufficient financial ability to make certain the prompt payment of all foreseeable compensation and assessments. The self-insurer also must have knowledge of this state's industrial insurance laws and demonstrate the ability to operate a workers' compensation program consistent with the department's rules and regulations, including an adequate claims management process.

Group self-insurance is a group of homogeneous employers who mutually agree to indemnify one another and share in the obligations and benefits of being part of a group. Group self-insurance is an alternative to the State Fund for smaller employers in the two categories in Washington State that can group self-insure, hospitals and school districts.

All group self-insurers must demonstrate ability to meet financial requirements by Labor & Industries as well as all other laws and regulation set forth such as the ability to operate a workers' compensation program.