Published October 2026.
Direct Answer: In four U.S. states—North Dakota, Ohio, Washington, and Wyoming—private workers’ compensation insurance does not exist. Employers buy statutory coverage from the exclusive state fund, report payroll or hours, and let the state manage claims. Out-of-state contractors who send a crew there generally must open a fund account and buy private stop-gap employer’s liability, because the fund typically does not include it.
What monopolistic coverage means
Monopolistic, or exclusive-state-fund, workers’ compensation means there is no private market for the statutory policy. You cannot shop carriers or place the state on a standard NCCI policy. The state is the only workers’ compensation insurer. Rates, classes, reporting, and claim decisions all come from that fund.
That is a different world from competitive states, where a private policy and classification, payroll, and experience rating drive premium. Benefits still look familiar—medical care, wage replacement, and death benefits—but the “carrier” is a government fund. Ohio and Washington let some large employers self-insure after certification. Self-insurance is not a private policy. North Dakota and Wyoming generally do not offer it.
The four exclusive state funds
North Dakota — Workforce Safety & Insurance (WSI) is the insurer and the regulator. Employers report wages through myWSI and must notify WSI before work.
Ohio — Bureau of Workers’ Compensation (BWC) sells most private coverage through the State Insurance Fund, with estimated premium and an annual true-up. Ohio group-rating is not Washington retro.
Washington — Department of Labor & Industries (L&I) calls the product industrial insurance and bills “premiums” on worker hours, not payroll dollars. Contractors also register with L&I.
Wyoming — Workers’ Compensation Division requires coverage for extra-hazardous occupations, including most construction. Other occupations may elect coverage. Anyone who works in Wyoming or hires a Wyoming resident still registers.
How coverage works day to day
The fund assigns classifications and a rate for each class. You track payroll, hours, or other units by class and file on the fund’s schedule—quarterly in North Dakota and Washington, and through Ohio’s estimated premium plus annual true-up. Wyoming uses its own payroll reports after it issues a statement of coverage.
When a worker is hurt, the claim is filed with the fund. The state decides compensability, medical care, time-loss, and closure. You still report the injury and answer the examiner. Good claims management still matters, because reserves and lost-time days feed experience rating and, in Washington, retro refunds. Owners want a fund certificate, not a private ACORD form. If a sub’s account lapses, primes in Ohio, Washington, and North Dakota can inherit premium or claim exposure.
North Dakota Workforce Safety & Insurance
WSI coverage is mandatory if you hire in North Dakota for North Dakota work, pay 25 percent or more of a worker’s annual wages for services there, or have 25 percent of gross annual payroll earned on North Dakota work. Once the account is open, report all North Dakota wages.
Payroll reporting is quarterly in myWSI and due 30 days after the period ends. New accounts are billed on estimated payroll, then reconciled to actual wages. Construction can be split by operation if you keep separate payroll. If you do not, WSI assigns the highest class on that job. Out-of-state contractor certificates do not transfer. Ask every sub for a WSI Certificate of Payment or Verification of Nonemployment. An uninsured period can leave you responsible for claim costs, noncompliance premium, penalties, and interest.
Ohio Bureau of Workers’ Compensation
Ohio private employers typically pay estimated premium before the July 1 policy year, then file an annual true-up of actual payroll by August 31. Extra payroll means more premium. Lower payroll produces a credit. Late true-up can drop group rating and add interest.
BWC covers employees hired to work in Ohio. If an out-of-state employee works 90 consecutive days or fewer, BWC may treat home-state extraterritorial coverage as controlling. After 90 consecutive days, Ohio generally takes jurisdiction and those wages become reportable. Ohio residents working in Ohio for an out-of-state company are reportable from the start. Public owners will ask for a BWC certificate. A prime can be liable if a sub has no coverage.
Washington industrial insurance through L&I
Washington is the monopolistic system contractors misunderstand most often. L&I uses “industrial insurance” and “workers’ compensation” as the same product. You do not buy a policy from an insurer. You open an industrial insurance account, receive a Workers’ Compensation Rate Notice, and pay premiums each quarter.
Premium is almost always hours-based. You report actual hours in each risk class—overtime counts hour for hour—and L&I multiplies those hours by a composite rate that stacks the accident fund, medical aid fund, Stay at Work, and the supplemental pension fund. Vacation, sick leave, and holiday hours are generally not reported. A quarter with no hours still needs a zero-hour report.
Workers may pay part of the bill. State law lets the employer deduct up to one-half of the medical-aid, Stay at Work, and supplemental pension rates. The rate notice shows the maximum deduction by class. L&I still bills the employer for the full premium. Risk classes follow the work you actually do, and L&I applies its own experience factor. That factor is not an NCCI mod, even though the idea is the same.
Claims are filed with L&I. The worker or medical provider starts the accident report, and L&I pays medical and time-loss from the State Fund. A written accident-prevention program is mandatory. Construction contractors also need L&I contractor registration and a Unified Business Identifier. Primes can be charged for a sub’s unpaid premiums if they cannot show a true independent contractor with an account in good standing.
Retrospective rating and Stay at Work in Washington
Retrospective rating, called retro, is a voluntary L&I incentive on top of standard premiums. Every State Fund employer still pays those premiums. After the coverage year, L&I recalculates a retro premium from premiums and actual losses. Low losses can produce a refund. High losses can produce an additional assessment. L&I adjusts each coverage year three times as claims develop.
You can enroll as an individual or through an association-sponsored group for a one-year coverage period. Individual enrollment needs a minimum standard-premium total from the prior four quarters and an application in the month before the period starts. Group enrollment needs association membership, a data-release form, and an account in good standing. Similar L&I accounts must enroll together. L&I auto-reenrolls members unless you or the sponsor withdraw in writing.
Contractors join because construction classes are expensive and the group brings claims and safety help the fund will not staff for you. Construction groups include AGC of Washington, ABC of Western Washington, BIAW (ROII), Master Builders (GRIP), SMART, and the Southwest Washington Contractors Association. The association usually hires a third-party administrator to work claims with L&I and push light-duty.
Stay at Work is a separate State Fund incentive. If a provider restricts a worker and you offer an approved light-duty job, L&I can reimburse 50 percent of basic gross wages for up to 120 days, subject to a dollar cap, plus limited tools, training, and clothing. You need a provider-approved job description, payroll records, and a timely My L&I request. Retro groups use it because light duty protects both the refund and the experience factor.
Wyoming Workers’ Compensation Division
Wyoming’s exclusive fund covers extra-hazardous employment listed in statute, including construction and many field trades. Other occupations may elect coverage, but they still register. The Division issues a statement of coverage and expects you to have it before work starts. Out-of-state employers complete joint registration and the Out-of-State Employer Questionnaire. The Division may require a premium deposit or surety and will ask the home-state insurer for experience history. With no usable history, expect a 1.00 mod.
Employer’s liability and stop-gap coverage
A standard private workers’ compensation policy has two parts. Part One pays statutory benefits. Part Two, employer’s liability, pays when someone sues outside the exclusive remedy—dual-capacity claims, third-party-over actions, and some family consequential-injury suits. Monopolistic funds provide the Part One equivalent. They typically omit Part Two.
Stop-gap employer’s liability fills that hole. The funds do not require it, but contractors need it because a job-site injury can still produce a lawsuit the fund will not defend. If you already have a workers’ compensation policy for other states, stop-gap is usually endorsed onto that policy. If you operate only in a monopolistic state, add it to commercial general liability. A business owners policy is not workers’ compensation. Read the declarations and exclusions to confirm the four states and the limits. The endorsement will not rescue a missing fund account. Treat the limits as real, given social inflation and nuclear verdicts.
What out-of-state contractors must do
When your crew works a job in North Dakota, Ohio, Washington, or Wyoming, that payroll is generally reported to the exclusive fund. Other-states insurance is built for competitive jurisdictions. Monopolistic states are usually left out of Item 3.A and Item 3.C because the carrier cannot write statutory coverage there. Extraterritorial language may cover a short trip into a competitive state. It does not replace a required fund account.
Open the account before mobilization. In North Dakota, apply as soon as you have significant contacts or a local hire. In Ohio, assume BWC coverage for Ohio work. The 90-day rule is a claim-jurisdiction test, not permission to skip an account on a long project. In Wyoming, register even if coverage might be optional, and do not start extra-hazardous work without a coverage statement.
Washington is stricter for contractors than for a traveling salesperson. Reciprocal agreements with Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, and Wyoming can let a temporary non-construction crew stay on home-state coverage if the home insurer will pay Washington claim costs and an extraterritorial certificate is on file. Montana and Nevada exclude construction. Work that requires Washington contractor registration, or an electrical or plumbing license, must be reported to L&I. If the home-state insurer later denies a Washington injury, you can owe unpaid premium, interest, penalties, and 50 to 100 percent of the claim cost. Put the fund account, stop-gap, and home-state exclusions into commercial insurance program design when you bid.
Premium audits and penalties in a state fund
State funds audit estimated payroll or hours, reclassify mismatched work, and pick up 1099 labor that fails the independent-contractor test. The same agency also decides your claims. Underreported units produce additional premium. Uninsured periods are worse. North Dakota can charge noncompliance premium and hold the employer for claim costs. Ohio can lapse coverage, add interest, and remove the account from rating plans after a late true-up. Washington can assess unpaid premiums, interest, reporting penalties, and a large share of an uninsured claim, and it can invoice a prime for a sub’s delinquency. Wyoming expects a statement of coverage before the job starts. Keep class-level hour or payroll logs and sub certificates, file a zero report when idle, and pay on the fund’s due date.
FAQ
What does “monopolistic” mean in workers’ compensation?
Monopolistic means the state operates an exclusive fund and private carriers cannot sell statutory workers’ compensation there. The state is the only insurer for those benefits. Ohio and Washington allow some large employers to self-insure after certification, but that is not a private policy.
Which four states are monopolistic?
The four states are North Dakota, Ohio, Washington, and Wyoming. Coverage comes from Workforce Safety & Insurance, the Ohio Bureau of Workers’ Compensation, Washington L&I, and the Wyoming Workers’ Compensation Division.
How is Washington L&I different from a private carrier?
Washington calls the system industrial insurance and bills premiums on worker hours, not payroll dollars. L&I assigns risk classes, sets composite rates, and manages claims. Workers may share the medical-aid, Stay at Work, and supplemental pension portions by payroll deduction, but the employer still owes the full premium.
What is retrospective rating?
It is a voluntary Washington L&I program that recalculates cost after the coverage year using actual losses. Employers who control claims can earn refunds. Poor results can produce an extra assessment. Contractors often join association retro groups for shared risk and claims support.
Can I buy employer’s liability in a monopolistic state?
Yes. The state fund typically does not include employer’s liability, so you buy stop-gap coverage from a private carrier. It is usually added to a general liability policy if you work only in a fund state, or to a workers’ compensation policy that already covers other states.
What must out-of-state contractors do before working there?
Open an account with that state’s fund before crews start, report the job-site payroll or hours, and keep proof of coverage. Home-state policies usually exclude these four states. Reciprocal rules can apply to short visits, but construction work in Washington generally must go on an L&I account.