For small businesses that do not have their own HR department or small business looking to lower workers compensation rates, PEOs can help. Professional Employer Organizations offer a variety of different workers' compensation insurance solutions to meet their clients needs.  

Workers’ compensation insurance was created to provide your employees benefits in the instance of a work-related injury or illness. Most states require employers to carry workers compensation insurance for their employees. The business is responsible for buying and paying for this insurance coverage. Each insurance policy type is structured differently and usually covers : disability benefits, medical treatments and vocational rehabilitation.

There are four main workers’ compensation policy types that your small business can choose from: master policy, client policy, master deductible policy and a captive policy. Knowing more about each type of policy and its unique benefits can help you decide which one may be the best choice for you and your employees. 


Provider insures their clients through a licensed carrier that is fully insured at "first dollar coverage" for claims. The insured does not have copays out-of-pocket expenses before coverage begins. 

Best for: New or existing businesses looking to reduce rates, eliminate policy fees and audits.


An individual, portable policy written for your business and administered by the PEO company.

Best for: Clients with existing policies and a low experience rating, or unique industries not offered under a PEO's master policy.


Similar to the master policy, except the PEO service is responsible for claims up to a certain limit (deductible) per claim with an aggregate limit to limit their exposure.

Best for: New or existing businesses in high risk industries, or with poor claims history looking to reduce rates, eliminate policy fees and audits.


A separate insurance company is set up by the PEO provider through another licensed carrier (a.k.a. "fronting company") for the purpose of writing insurance under the captive.

Best for: Unique industries, or new and existing businesses looking to reduce rates, eliminate policy fees and audits.