Workers' Compensation: West Virginia vs. Ohio's Monopolistic System

If your business operates in both West Virginia and Ohio, you've probably noticed something different about workers' compensation insurance. In West Virginia, you buy workers' comp from a private insurance company—just like you'd buy auto or property insurance. But cross the river into Ohio, and you're dealing with a completely different system.

Ohio is one of just four "monopolistic" states for workers' compensation. Understanding this distinction is critical for any business operating across state lines. Let me break down how these systems differ and what it means for your business.

In a monopolistic state workers' compensation system, the state government is the only provider of workers' comp insurance. Private insurance companies cannot sell workers' comp coverage in these states.

Currently, four states have monopolistic workers' comp systems:

• **Ohio** — Ohio Bureau of Workers' Compensation (BWC)
• **Wyoming** — Wyoming Workers' Compensation Division
• **North Dakota** — Workforce Safety & Insurance
• **Washington** — Washington State Department of Labor & Industries

In these states, employers must obtain coverage directly from the state fund. There's no shopping around for competitive quotes from different carriers.

West Virginia operates a competitive, private-market workers' compensation system. This means:

Multiple carrier options: You can get quotes from dozens of insurance companies and choose the best combination of price, service, and coverage.

Bundled policies: Workers' comp is often bundled with other business insurance through a single agent, making administration easier.

Competitive pricing: Insurance companies compete for your business, which can drive down costs—especially for businesses with good safety records.

Agent representation: Your independent insurance agent shops the market for you, negotiates on your behalf, and advocates for you during claims.

Experience modification: Your claims history affects your premiums through an experience modification factor (mod), calculated by NCCI (the National Council on Compensation Insurance—the organization that collects data and sets baseline rates for most states). Good safety records lead to lower premiums; poor records increase them.

Workers' Comp AND Employers' Liability: This is important—in West Virginia, your workers' comp policy includes both Part One (workers' compensation benefits) and Part Two (employers' liability coverage). More on why this matters below.

In West Virginia, we can write your workers' comp alongside your general liability, commercial property, and other coverages. It's straightforward and familiar.

Ohio's Bureau of Workers' Compensation (BWC) operates very differently:

Single provider: All employers must get coverage from the BWC. No private market exists.

Direct relationship: You deal directly with the state agency, not an insurance company.

Separate policy: Your Ohio workers' comp is completely separate from your other business insurance policies.

State-set rates: Premium rates are established by the BWC based on classification codes and the overall experience of all Ohio employers in your industry.

Different experience rating: Ohio uses its own experience rating system, separate from NCCI.

Group rating programs: Ohio offers group rating and group retrospective rating programs that can significantly reduce premiums for businesses with good safety records (more details below).

Workers' Comp ONLY—No Employers' Liability: This is a critical difference. Ohio BWC coverage is workers' compensation only. It does NOT include employers' liability coverage. You must add employers' liability to your general liability policy separately, or you have a dangerous gap in coverage.

If you have employees in both states, you need two separate workers' compensation arrangements:

For West Virginia employees: Purchase coverage through a private insurance carrier (that's where we come in).

For Ohio employees: Register with and purchase coverage directly from Ohio BWC.

This creates some administrative complexity:

• Two different policies with different renewal dates
• Two different billing and payment systems
• Two different claims processes
• Two different experience rating calculations

To obtain workers' comp coverage in Ohio, you must:

1. Register your business with the Ohio BWC

2. Determine your classification — Ohio uses its own classification system (similar but not identical to NCCI codes)

3. Report your payroll — You'll estimate annual payroll for Ohio employees

4. Pay premiums — Ohio uses a prospective billing system; you pay based on estimated payroll and adjust later

Most employers pay premiums in installments throughout the year. Premium audits reconcile estimated vs. actual payroll at year-end.

This is one of the most important—and most overlooked—differences between the two states.

What is Employers' Liability?

Workers' compensation covers medical bills and lost wages when an employee is injured on the job. But what happens when an employee (or their family) sues you for something beyond the standard workers' comp claim? That's where employers' liability comes in.

Employers' liability covers lawsuits alleging:

• **Third-party-over claims** — An employee is injured by defective equipment, sues the manufacturer, and the manufacturer sues you for contribution
• **Dual-capacity claims** — You're sued as both employer and product manufacturer
• **Consequential bodily injury** — A spouse sues for loss of consortium after a workplace injury
• **Care and loss of services** — Family members sue for loss of the employee's household contributions

In West Virginia: Your workers' comp policy automatically includes employers' liability (Part Two). Standard limits are typically $100,000 per accident / $500,000 policy limit / $100,000 per employee for disease. You're covered.

In Ohio: The BWC policy provides workers' compensation ONLY. There is NO employers' liability coverage included. You must purchase "Stop Gap" employers' liability coverage separately—typically added as an endorsement to your general liability policy.

The Risk: If you operate in Ohio without Stop Gap coverage, you're exposed to potentially devastating lawsuits with no insurance protection. We've seen business owners assume their BWC policy covered everything, only to discover the gap when a lawsuit arrived.

The Fix: When we write your general liability policy, we'll add Stop Gap employers' liability coverage for your Ohio operations. It's typically inexpensive—often just a few hundred dollars annually—but provides essential protection.

One advantage of Ohio's monopolistic system is the group rating program. This is one of the best ways to reduce your Ohio workers' comp costs, and it's worth understanding in detail.

How Group Rating Works:

Ohio BWC calculates premiums based partly on your individual claims experience and partly on industry-wide experience. Group rating allows employers to pool their experience with other similar businesses to achieve a better combined experience modifier.

Think of it like this: if you join a group of 100 employers in your industry, and that group collectively has fewer claims than average, everyone in the group gets a discount—even if your individual experience is just average.

Potential Savings:

Group rating discounts can be substantial:

• Small employers with good records might see 20-40% savings
• Larger, well-managed groups can achieve 50% or more off base rates
• Some groups have achieved discounts exceeding 90% for employers with excellent safety records

Eligibility Requirements:

Not everyone qualifies for group rating:

• You must have an active Ohio BWC policy in good standing
• Your claims history must meet the group's standards (groups set their own thresholds)
• You typically need at least one year of Ohio payroll history
• Some groups require minimum premium levels
• You must apply during the annual enrollment window

The Application Timeline:

This is critical—group rating has strict deadlines:

• The enrollment window typically opens in late summer/early fall
• Applications must be submitted by the deadline (usually late October or early November)
• Coverage begins the following July 1st
• Miss the deadline, and you wait an entire year

Group Retrospective Rating:

For larger employers, Ohio also offers group retrospective rating. This is more complex—your final premium is adjusted based on the group's actual claims experience during the policy period. It can provide even greater savings for groups with excellent safety performance, but it also carries some risk if claims are worse than expected.

How to Find a Group:

Groups are typically sponsored by:

• Trade associations and industry groups
• Chambers of commerce
• Professional employer organizations (PEOs)
• Third-party administrators specializing in Ohio workers' comp

We work with several group rating sponsors and can help you find one appropriate for your industry and size. The key is applying early—don't wait until the deadline is upon you.

Mistake #1: Assuming your WV policy covers Ohio employees

It doesn't. Workers' comp coverage is state-specific. If you have employees working in Ohio, you need Ohio coverage—period.

Mistake #2: Forgetting about employers' liability in Ohio

This is the big one. Your Ohio BWC policy does NOT include employers' liability. You need Stop Gap coverage on your general liability policy, or you're exposed to lawsuits with no protection. We see this gap more often than we'd like.

Mistake #3: Forgetting about temporary Ohio work

If your West Virginia employees occasionally work in Ohio, you may still need Ohio coverage. The rules depend on duration and frequency of work in the state.

Mistake #4: Misclassifying employees

Ohio classification codes determine your premium rate. Using the wrong code can mean overpaying—or underpaying and facing penalties later.

Mistake #5: Missing the group rating deadline

Group rating applications have specific deadlines (typically late October/early November for coverage starting the following July). Missing them means waiting another year for potential savings.

Mistake #6: Not reporting payroll changes

Your Ohio premium is based on payroll. If your workforce changes significantly, report it to avoid large year-end audit adjustments.

While we can't write your Ohio workers' comp policy directly (nobody can—it has to come from BWC), we can still help:

For West Virginia: We'll shop multiple carriers for competitive workers' comp coverage (including employers' liability) and bundle it with your other business insurance.

For Ohio: We can connect you with group rating sponsors, and—critically—make sure you have Stop Gap employers' liability coverage on your general liability policy. You'll need to register directly with BWC for your workers' comp coverage, but we'll make sure there are no gaps in your overall protection.

Multi-state coordination: We'll help you understand how the two systems interact and ensure you have proper coverage on both sides of the river, with no gaps in employers' liability protection.

Many of our clients operate in both states. We're experienced in navigating these different systems and making sure you're properly covered wherever your employees work.

Workers' compensation is mandatory in both West Virginia and Ohio—but how you obtain and manage that coverage differs dramatically between the states. Understanding these differences is essential for any business operating across state lines.

If you're currently operating in only one state but considering expansion, or if you're already dealing with both systems and feeling confused, let's talk. We can help you understand your obligations and find the most cost-effective way to protect your employees and your business.

Questions about workers' comp in West Virginia or Ohio? Give us a call. We're happy to walk you through your options.