Monopolistic State Fund

A handful of states operate monopolistic state funds for workers' compensation, meaning private insurers are not allowed to sell workers' comp in those states. As of current law, North Dakota, Ohio, Washington, and Wyoming are the monopolistic state fund states. If your tree service company operates in one of these states, you must obtain your workers' comp policy from the state fund — you cannot shop it to private carriers.

For tree service companies operating in monopolistic states, the pricing and coverage terms are set by the state fund. You do not have the ability to negotiate rates or shop between carriers for better pricing. However, most state funds still apply experience rating, so your claims history affects your premium. Maintaining a strong safety record is just as important in a monopolistic state as it is elsewhere.

One key implication for multi-state tree service operations: if you have employees working in both a monopolistic state and a competitive state, you will need separate workers' comp policies. Your private carrier cannot extend coverage into the monopolistic state, and the state fund policy only covers work within that state. This adds administrative complexity and cost.

Another important distinction: monopolistic state fund policies typically do not include employers' liability coverage (Part B of a standard workers' comp policy). In competitive states, employers' liability is automatically included and covers lawsuits by employees for work-related injuries outside the workers' comp system. In monopolistic states, you need to purchase a separate "stop gap" employers' liability policy — usually added as an endorsement to your GL policy — to fill this gap.