Insurance Comparison
Monopolistic State Fund vs Private Carrier Workers' Comp
Understand how workers' compensation works in monopolistic state fund states versus private carrier states, and what this means for your tree service operations.
| Dimension | Monopolistic State Fund | Private Carrier Workers' Comp |
|---|---|---|
| Where It Applies | Four states: Ohio (BWC), North Dakota (WSI), Washington (L&I), and Wyoming (WCD). These states require you to purchase workers' comp exclusively from the state fund. | All other 46 states allow (and most require) workers' comp purchased from private insurance carriers or through competitive state funds. |
| Carrier Choice | No choice — you must purchase from the state-operated fund. No competing carriers are permitted. | Full market competition. You can shop among dozens of carriers for the best combination of price, service, and coverage. |
| Employer's Liability Coverage | State funds do NOT include Employer's Liability (Part B) coverage. You must purchase a separate Stop-Gap Employer's Liability policy. | Standard workers' comp policies include Part A (statutory benefits) and Part B (Employer's Liability, typically $500K/$500K/$500K) automatically. |
| Rate Setting | Rates are set by the state fund, often with limited negotiation. Ohio BWC uses group rating programs that can reduce premiums by 20-50% for qualifying employers. | Rates are based on NCCI or state bureau class codes but carriers compete on price through schedule credits, experience modification, and dividend programs. |
| Premium for Tree Services | Ohio BWC base rate for tree trimming is approximately $14-$18 per $100 of payroll before group rating discounts. Washington L&I rates vary by risk class. | NCCI class code 0106 base rates range from $12-$35+ per $100 of payroll depending on the state, with significant carrier competition driving actual prices lower. |
| Experience Modification | State funds use their own experience rating systems. Ohio's group rating program allows small employers to pool experience for better rates. | NCCI or state bureau calculates your experience modification factor (EMR) based on your individual loss history, applied uniformly across all carriers. |
| Dividend Programs | Some state funds offer retrospective rating or safety incentive programs. Ohio BWC offers a Destination: Excellence safety program with premium rebates. | Many private carriers offer dividend programs returning 5-15% of premium if the overall group loss experience is favorable. |
| Claims Process | Claims are managed by the state fund. In Ohio, injured workers file directly with BWC. The process is bureaucratic but standardized. | Claims are managed by your carrier's adjusters. Quality varies by carrier — choose a carrier with dedicated workers' comp claims teams experienced in construction/tree service injuries. |
| Multi-State Operations | If your tree service works in a monopolistic fund state, you must purchase a separate state fund policy for that state — your private carrier policy cannot extend there. | A single private carrier policy can cover operations in multiple states via the Item 3A section of your policy, simplifying multi-state compliance. |
Where It Applies
Monopolistic State Fund
Four states: Ohio (BWC), North Dakota (WSI), Washington (L&I), and Wyoming (WCD). These states require you to purchase workers' comp exclusively from the state fund.
Private Carrier Workers' Comp
All other 46 states allow (and most require) workers' comp purchased from private insurance carriers or through competitive state funds.
Carrier Choice
Monopolistic State Fund
No choice — you must purchase from the state-operated fund. No competing carriers are permitted.
Private Carrier Workers' Comp
Full market competition. You can shop among dozens of carriers for the best combination of price, service, and coverage.
Employer's Liability Coverage
Monopolistic State Fund
State funds do NOT include Employer's Liability (Part B) coverage. You must purchase a separate Stop-Gap Employer's Liability policy.
Private Carrier Workers' Comp
Standard workers' comp policies include Part A (statutory benefits) and Part B (Employer's Liability, typically $500K/$500K/$500K) automatically.
Rate Setting
Monopolistic State Fund
Rates are set by the state fund, often with limited negotiation. Ohio BWC uses group rating programs that can reduce premiums by 20-50% for qualifying employers.
Private Carrier Workers' Comp
Rates are based on NCCI or state bureau class codes but carriers compete on price through schedule credits, experience modification, and dividend programs.
Premium for Tree Services
Monopolistic State Fund
Ohio BWC base rate for tree trimming is approximately $14-$18 per $100 of payroll before group rating discounts. Washington L&I rates vary by risk class.
Private Carrier Workers' Comp
NCCI class code 0106 base rates range from $12-$35+ per $100 of payroll depending on the state, with significant carrier competition driving actual prices lower.
Experience Modification
Monopolistic State Fund
State funds use their own experience rating systems. Ohio's group rating program allows small employers to pool experience for better rates.
Private Carrier Workers' Comp
NCCI or state bureau calculates your experience modification factor (EMR) based on your individual loss history, applied uniformly across all carriers.
Dividend Programs
Monopolistic State Fund
Some state funds offer retrospective rating or safety incentive programs. Ohio BWC offers a Destination: Excellence safety program with premium rebates.
Private Carrier Workers' Comp
Many private carriers offer dividend programs returning 5-15% of premium if the overall group loss experience is favorable.
Claims Process
Monopolistic State Fund
Claims are managed by the state fund. In Ohio, injured workers file directly with BWC. The process is bureaucratic but standardized.
Private Carrier Workers' Comp
Claims are managed by your carrier's adjusters. Quality varies by carrier — choose a carrier with dedicated workers' comp claims teams experienced in construction/tree service injuries.
Multi-State Operations
Monopolistic State Fund
If your tree service works in a monopolistic fund state, you must purchase a separate state fund policy for that state — your private carrier policy cannot extend there.
Private Carrier Workers' Comp
A single private carrier policy can cover operations in multiple states via the Item 3A section of your policy, simplifying multi-state compliance.
What Tree Service Companies Need to Know
If your tree service operates in Ohio, North Dakota, Washington, or Wyoming, you are in a monopolistic state fund state — meaning you must purchase workers' compensation exclusively from the state-operated fund. There is no option to shop among private carriers. For the other 46 states (and DC), you buy workers' comp from private insurance carriers in a competitive market. This distinction has major implications for your premiums, coverage, and administrative burden.
The most critical difference is Employer's Liability coverage, also called Part B of a standard workers' comp policy. In a private carrier state, your workers' comp policy automatically includes both Part A (statutory workers' comp benefits) and Part B (Employer's Liability, typically with limits of $500,000 each accident / $500,000 disease per employee / $500,000 disease policy limit). Employer's Liability covers lawsuits by employees that fall outside the workers' comp exclusive remedy — such as dual-capacity claims or third-party-over actions. In monopolistic fund states, the state fund provides only Part A. You must purchase a separate Stop-Gap Employer's Liability policy, typically added as an endorsement to your general liability policy. If you forget this step, your tree service has no Employer's Liability coverage — a dangerous gap.
Ohio's Bureau of Workers' Compensation (BWC) is the largest of the four monopolistic funds, and it offers unique programs that can significantly reduce costs for tree services. The BWC group rating program allows small employers to join industry groups (often organized by trade associations like the Ohio chapter of TCIA) that pool their experience ratings. A tree service with good loss history can see premium discounts of 20-50% through group rating. The Destination: Excellence safety program offers additional rebates for implementing formal safety programs.
For tree services operating across state lines, monopolistic fund states add complexity. Your private carrier workers' comp policy (covering your home state and other states listed in Item 3A) cannot extend into Ohio, North Dakota, Washington, or Wyoming. If you send a crew to remove storm-damaged trees in Ohio, you need a separate Ohio BWC policy — even for temporary work. Failure to obtain coverage is a criminal offense in most monopolistic states. Work with an agent who understands multi-state workers' comp compliance to ensure you have proper coverage in every state where your crews operate.
Frequently Asked Questions
I am based in Texas and sending a crew to Ohio. Do I need Ohio BWC coverage?
Yes. Ohio is a monopolistic fund state, and any work performed in Ohio must be covered by an Ohio BWC policy. Your Texas workers' comp policy cannot extend into Ohio. You will need to register with Ohio BWC and obtain a policy — even for a single job. Contact BWC at least 2-3 weeks before the work begins to allow time for registration.
What is Stop-Gap Employer's Liability and do I need it?
Stop-Gap Employer's Liability provides Part B (Employer's Liability) coverage that the monopolistic state fund does not include. It covers employee lawsuits for work-related injuries that fall outside workers' comp. It is typically added as an endorsement to your GL policy for $200-$500 per year. Yes, you absolutely need it — operating without Employer's Liability coverage exposes your tree service to uninsured lawsuits.
Can I get a discount on my Ohio BWC premium for my tree service?
Yes. Ohio BWC offers group rating programs through sponsoring organizations, which can reduce premiums by 20-50%. The Tree Care Industry Association (TCIA) or your local arborist association may sponsor a group rating program. BWC also offers the Destination: Excellence safety program and various rebate programs for implementing drug-free workplace policies and safety training.
Is workers' comp required for tree services in every state?
Requirements vary by state. Texas and a few other states do not mandate workers' comp for private employers, though most clients and GCs will require it contractually. In monopolistic fund states, coverage is mandatory with severe penalties for non-compliance — including criminal charges. In most other states, workers' comp is required once you have 1-5 employees depending on the state.