Guide To PEO Policy Types

Policy1

Because laws governing workers' compensation and Professional Employer Organizations vary by state, it can be pretty confusing to determine what type of policy to use.  NCCI distinguishes 7 different PEO policy types which they group into 3 categories: 

Multiple & Multiple Coordinated Policies

  • A separate policy is issued for each client
  • Billing & notifications are sent to the PEO
  • Each client's mod is applied
  • Policies typically have a common expiration date
  • Multiple PEO Policies allow PEO to be first named insured

Master Policies

  • One policy is issued to the PEO to cover multiple clients
  • Billing & notifications are sent to the PEO
  • PEO mod and pricing factors are used (in most states)

Client Direct Purchase Policies

  • Similar to Multiple Coordinated Policies
  • A single client is the named insured
  • Policy covers both leased and non-leased employees

 

To determine which policy type to use in a given situation, first ask a few questions:

  1. Is a PEO policy needed?
  2. What types of employees are to be covered (leased, non-leased, direct)
  3. Who should be the first named insured / primary address?
  4. Are leased employees of multiple clients to be covered?
  5. Is the desired policy type available in the state(s) of operation?

 

The following table lists parameters of each policy type:

Type Description Employee Leasing Policy First Named Insured Additional Named Insured Multiple / Singe Client Covers Leased Employees Covers Non-Leased PEO Employees Covers Non-Leased Client Employees Primary Mailing Address
1 Standard Policies No              
2 Master Policies Yes PEO   Multiple Yes Yes No PEO
3 Direct EEs of PEO Yes PEO   None No Yes No PEO
4 Multiple Coordinated Policies Yes Client   Single Yes No No Client
5 Multiple PEO Policies Yes PEO Client Single Yes No No PEO
6 Client Policy For Non-Leased EEs Yes Client   Single No No Yes Client
7 Client Direct Purchase Yes Client   Single Yes No Yes Client
8 Master Policies Yes PEO   Multiple Yes No No PEO

  

Below is a listing of policy types available in the voluntary market for each state, obtained from NCCI and WCIO.  This  table was compiled in April of 2018 and reflects information published at that time.  

Stateguide

  1. As of April 2018 and published by NCCI
  2. "No statute addresses a PEO or employee leasing arrangement. In a case of first impression involving a temporary employee, Alaska adopted the general/special employer analysis whereby the special employer (client) is entitled the exclusive remedy of workers' compensation if (i) there is a contract of hire between the client and the employee; (ii) the work done is essentially that of the special employer and (iii) the special employer has the right to control the details of the work. " NAPEO
  3. As of April 2018 and published by WCIO
  4. “There are no voluntary or assigned risk market policy employee leasing rules”, Most of our carriers writs as a master #2.