Short answer: Ohio is one of a handful of monopolistic workers' compensation states. Private insurers can't sell Ohio workers' comp. Employers with one or more employees, including part-time workers, must get coverage through the Ohio Bureau of Workers' Compensation (BWC) or be approved to self-insure. Employer's liability, called stop gap, is bought separately.
A state-run system
In most states, a business buys workers' compensation from a private insurer. Ohio is different. The Ohio Bureau of Workers' Compensation (BWC) runs the State Insurance Fund, and Ohio Revised Code §4123.82 generally voids contracts that insure an employer against Ohio workers' comp liability other than through the state's system. The alternative is to qualify as a self-insuring employer, which is realistic only for larger, financially strong companies.
Ohio shares this monopolistic structure with a short list of states, including Washington. See Washington workers' comp state fund explained for a comparison.
Who needs coverage
Ohio requires private employers to have workers' compensation coverage as soon as they have one employee, full-time or part-time. New employers apply with the BWC using its application for coverage, form U-3. According to the BWC, coverage begins when it receives the completed application and fee, so apply before your first employee starts.
Sole proprietors, partners and LLC members without employees generally aren't required to cover themselves, but they can elect coverage.
How BWC premiums work
BWC premiums are based on:
- Payroll, reported to the BWC;
- Manual classifications, which group businesses by type of work and risk; and
- Experience, for employers large enough to have an experience modifier.
The BWC offers rebates, discount programs and group rating options in some policy years, and premiums are billed in installments. Employers report actual payroll at the end of each policy year in a true-up, and the BWC adjusts the premium.
Stop gap: the coverage the BWC doesn't provide
A standard workers' comp policy elsewhere includes employer's liability coverage (Part Two), which responds to certain lawsuits tied to workplace injuries, such as claims alleging an intentional workplace tort. BWC coverage doesn't include it. Ohio employers buy stop gap employer's liability coverage from a private insurer, usually as an endorsement to a general liability policy. Without it, the business may have no insurance for those lawsuits.
Employees outside Ohio
BWC coverage is built for Ohio. If employees regularly work in other states, you may need a private policy for those states. Ohio employees temporarily working elsewhere may have limited BWC protection, but rules vary. A private "other states" policy is a common solution.
Penalties for going without
An employer without BWC coverage when an employee is injured is considered noncomplying. The BWC can bill the employer for the full cost of the claim, plus penalties, and the employer can lose the legal protection workers' comp normally gives against lawsuits. Lapses for unpaid premium can create the same exposure.
Common scenarios
You hire your first part-time employee. Apply to the BWC before that employee's first day.
A general liability insurer asks if you need stop gap. If you have Ohio employees, the answer is usually yes.
You hire a remote employee in Kentucky. Kentucky is not a monopolistic state, so you'll likely need a private Kentucky workers' comp policy.
You miss a BWC installment. A lapse can leave you noncomplying. Pay promptly and confirm reinstatement.
Key terms
- Monopolistic state: a state where workers' comp must be bought from a state fund.
- BWC: the Ohio Bureau of Workers' Compensation.
- Stop gap: employer's liability coverage bought separately in monopolistic states.
- True-up: the year-end payroll report that adjusts BWC premium.
Questions to ask your broker
- Do I have stop gap coverage, and are the limits high enough?
- Do any employees work in other states?
- Am I eligible for any BWC discount or group rating programs?
- Should owners or LLC members elect coverage?
Bottom line
In Ohio, workers' comp comes from the BWC, starting with your first employee. Your broker's role is to help with stop gap, other-states coverage and the rest of your business insurance. Learn more on our workers' compensation insurance page.
Contact Alishahi Insurance or call (877) 711-4545. See insurance in Ohio and our business owners policy (BOP) guide.
Frequently asked questions
Can I buy Ohio workers' comp from a private insurer?
No. Ohio is monopolistic. Coverage comes from the BWC unless you're approved to self-insure.
When does an Ohio employer need workers' comp?
As soon as it has one employee, full-time or part-time.
What is stop gap coverage?
Employer's liability coverage, bought from a private insurer, because BWC coverage doesn't include it.
How are BWC premiums calculated?
Mainly by payroll, manual classifications and, for some employers, experience.
What happens if an Ohio employer has no coverage?
The BWC can bill the employer for the claim cost plus penalties, and the employer can be sued directly.
Alishahi Insurance · 439 N Canon Dr, Penthouse, Beverly Hills, CA 90210 · (877) 711-4545 · CA License #4348151. General information only. This isn't legal, tax or financial advice or a coverage determination. Coverage depends on policy language and underwriting, and rules vary by state.