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Definition of State Insurance Fund

A state insurance fund is a quasi-public agency that provides workers' compensation insurance coverage to both private and public employers. The way in which a state insurance fund is operated varies from state to state. In some states, employers are required to get workers' compensation insurance from a compulsory state insurance fund, or they have to qualify as a self-insurer, which is only permitted in two of these states. In other states, employers can choose between purchasing workers' compensation insurance coverage from the state's insurance fund, or they can purchase workers' compensation insurance form an insurance company.

In general, state insurance fund workers' compensation coverage is usually higher than coverage from a private insurance company. Employers who cannot get private insurance coverage because of their claims, losses or the risk that is associated with their class codes, have to purchase insurance from the state insurance fund. In New York, the state insurance fund has to offer workers' compensation insurance to any employer who asks for it. This makes the state insurance fund an "insurer of last resort" for an employer that cannot get coverage anywhere else.

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