New Jersey employers are mandated by the law to get approval for workers’ compensation insurance coverage or to self-insure for their employers who are not covered by federal programs. Even if the employer is out-of-state or incorporated elsewhere, it must still abide by the New Jersey workers’ compensation law if either it entered into an employment contract in New Jersey or work was performed in that state.

There are two kinds of workers compensation insurance policies that New Jersey employers may obtain:

1. A workers’ compensation insurance policy or
2. Self-insurance.

A Workers’ Compensation Insurance Policy: From a mutual or stock insurance carrier that has been approved by the state of New Jersey to write insurance. The insurer will determine the premium amount based on the classification of work that the employees do, how much claims experience the employer has, and what the employer’s payroll is like.

Self-Insurance: Employers who choose not to purchase a workers’ compensation insurance policy may self-insure by applying to, and obtaining approval from, the New Jersey Commissioner of the Department of Banking and Insurance. The bases for approval are:

1. whether the employer has the financial capability to meet all of its legal obligations; and
2. whether the business is permanent or not. Sometimes, the employer will have to post up a security to ensure that it will meet its legal obligations.

If an employer is self-insured, it can either handle its own workers’ compensation claims or contract out that duty to a third-party administrator (TPA). The laws regarding self-insurance are covered in the New Jersey Workers’ Compensation statute, N.J.S.A. 34:15-77.

Agencies of the government have different requirements: they must provide workers’ compensation benefits to their employees, but they do not have to purchase insurance or get approval as a self-insurer. Their options are:

1. get a workers’ compensation insurance policy;
2. participate in an insurance pool; or
3. keep separate funds appropriated for workers’ compensation.

If you have suffered a work-related injury or illness, contacting New Jersey workers' compensation attorneys can help you navigate the complex legal process, understand your rights, and secure the compensation you deserve.