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High Risk PEO Service: Which PEOs Cover High-Risk Businesses (2026)

By Cesar Figueroa, Owner, ReUp Benefits · Licensed health insurance and PEO broker

In this guide

What is a high risk PEO service? A high risk PEO service is a PEO that accepts businesses in hazardous industries, like construction, roofing and landscaping, that many PEOs decline. Because a PEO co-employs your team and often carries workers' comp risk, mainstream PEOs avoid these trades. Specialists cover them, manage claims, and some let you keep your own workers' comp policy.

If you run a construction, roofing, landscaping or other trades business, you may have already heard "no" from a PEO. That's how most PEOs are built, not a judgment on your company. I spent more than ten years inside three PEOs, and the high-risk question came up constantly: great companies that wanted better benefits, and PEOs that couldn't take the workers' comp exposure.

This guide covers why so many PEOs pass on high-risk businesses, what a high risk PEO service does differently, whether it can lower your workers' comp costs, and how carving out workers' comp can still get your team PEO benefits. For the basics, start with our guide to how workers' comp works through a PEO.

What is a high risk PEO service?

A high risk PEO service is a PEO, or a program inside a PEO, built to cover industries with more frequent or more expensive workplace injuries. The difference shows up almost entirely in workers' comp: which carriers it uses, which class codes it will write, and how it handles safety and claims.

"High risk" usually means one of three things:

  • Your industry. Construction and the trades, roofing, landscaping, manufacturing, transportation and similar physical work. FrankCrum, for example, says its carrier is known for insuring construction, roofing, landscaping, electrical and other trades.
  • Your claims history. A high experience mod or heavy recent claims, even in a lower-risk industry.
  • Missing history. Start-ups or companies with gaps in coverage, which give underwriters nothing to price.

Even specialists have limits. FrankCrum's own PEO underwriting guidelines (updated January 2026) still list exposures like tower climbing, mining, stevedoring and hazardous material transport as excluded or restricted. Every PEO draws its line somewhere.

Why many PEOs won't take high-risk businesses

Most PEOs avoid high-risk businesses because of co-employment. When a PEO co-employs your team, it shares employer responsibility for workers' comp, and on a PEO master policy, your injuries become its claims.

Three things push mainstream PEOs away from high-risk work:

  • The PEO often carries the claims cost. Large PEOs keep part of the workers' comp risk themselves. TriNet's 2025 annual report says it assumes the risk for losses up to $1 million per claim occurrence under its workers' comp policies. Florida's legislative research office reported in 2021 that some PEOs hold large deductible workers' comp policies. A few serious injuries can wipe out the margin on a client.
  • Carriers set the appetite. A PEO can only write what its workers' comp carrier allows. Our guide to PEO underwriting shows how carrier exclusion lists rule out industries like logging, mining and roofing before a PEO even looks at you.
  • The business model favors office work. Most large PEOs are built around professional services clients. Justworks says in its help center (updated July 2026) that it can't support companies with "employees engaged in high-risk manual labor, such as construction work." Insperity's 2024 annual report says it tries to minimize offering its PEO to businesses in industries "that we believe present a higher employer risk such as employee injury, high turnover or litigation."

So a decline from a mainstream PEO usually means the PEO's model doesn't fit your risk. It doesn't mean no PEO will take you.

Mainstream PEO High risk PEO service
Typical clients Tech, professional services, office-based teams Construction, trades, landscaping, manufacturing
High-risk class codes Often excluded or declined Accepted, within the carrier's limits
Workers' comp carrier Usually one master policy program Its own carrier or several partner carriers
Safety support General resources Industry-specific safety programs and inspections
Claims Usually passed to the carrier Often managed from first report to closure
Keeping your own policy Rarely allowed Sometimes allowed
High risk PEO service vs mainstream PEO: mainstream PEOs often decline construction and trades, while high-risk PEOs accept them with their own carriers, safety programs and claims management

The difference is almost all workers' comp.

What a high risk PEO service does differently

A high risk PEO service is built to carry injury risk and manage it, instead of screening it out. In practice that means four things.

Carriers that want your class codes

Specialists either own a carrier or work with carriers whose appetite includes the trades. FrankCrum, for example, owns its carrier, Frank Winston Crum Insurance, and says it also works with an alternative partner carrier for a wider range of underwriting appetites.

Safety programs built for your work

Fewer injuries is the only lasting way to lower workers' comp costs. High-risk PEOs typically offer industry-specific safety programs, site inspections and loss analysis that shows where your claims come from.

Claims handled end to end

This is the biggest practical difference. Many PEOs pass an injury report to the carrier and step back. Some high-risk PEOs manage the whole claim. FrankCrum says it manages "nearly the entire claims process in-house, from reporting to investigation, and return-to-work planning", working with a third-party administrator that issues the payments.

  1. Injury reported. Your supervisor reports it to the PEO right away, often through a 24/7 line.
  2. Investigation. The PEO gathers facts, witness statements and medical details.
  3. Claim filed and paid. The carrier or third-party administrator accepts and pays the claim.
  4. Case management. The PEO stays in touch with the injured employee and the doctors.
  5. Return to work. Light-duty or modified roles bring the employee back sooner.
  6. Closure and review. The claim closes, and loss analysis shows how to prevent the next one.
High risk PEO service claims management in six steps: injury reported, investigation, claim filed and paid, case management, return to work, and closure with loss review

Faster return to work means smaller claims and a better experience mod.

Pay-as-you-go billing

Premium is billed with each payroll on actual wages instead of a large deposit and a year-end audit. FrankCrum compares a standalone deposit of $5,000 to $15,000 or more with no deposit through its PEO. Our guide to PEO workers' comp explains how pay-as-you-go works.

Can a high-risk PEO lower your workers' comp costs?

Sometimes. A high-risk PEO can lower costs through better carrier programs and fewer, smaller claims, but it can also cost more than a standalone policy. You only know by comparing.

The lever that matters most over time is your experience mod. It compares your claims with similar businesses, usually over three years of history. According to Pinnacol Assurance, a mod of 1.25 means paying 25% more than others in your class, and a mod of 0.85 means a 15% discount. Every claim that closes faster and smaller helps bring that number down.

Vendors make bigger claims. FrankCrum says its rates are "often 20% lower" than standalone policies, but it doesn't publish how it measures that, so treat it as a sales claim, not a promise. PEOs also add their own load on top of the carrier's rate, which is one of the ways PEOs make money on workers' comp.

To compare fairly, get the PEO's rate per $100 of payroll for each class code, a standalone quote for the same codes, and the experience mod each price assumes. In my experience, high-risk companies with a strong safety record often do well in a PEO, while companies with recent heavy claims usually pay a premium wherever they go.

Can you carve out workers' comp and still get PEO benefits?

Often, yes. Some PEOs let you keep your own workers' comp policy while your team joins the PEO for payroll, health insurance and HR. This is called a carve-out, or client-secured coverage.

FrankCrum describes client-secured coverage as your business buying its own policy directly from a carrier while the PEO handles administration, with your claims history and experience rating staying entirely yours. New York's Workers' Compensation Board also allows the client to buy its own policy for leased employees.

Not every PEO allows it. Justworks says it requires customers to be insured under its workers' comp policy, "with some limited exceptions." In my experience, some PEOs will only approve a carve-out once a client reaches a certain size, often somewhere around 50 employees, because a larger company can show the carrier its own claims history and maintain its own policy. Ask each PEO where its line is. Texas is a special case, since most private employers there can skip coverage entirely; our Texas PEO buying guide explains how that changes the PEO decision.

A carve-out has trade-offs:

  • You keep: your own experience mod, an easy exit, and access to the PEO's health plans and HR support.
  • You give up: the PEO's carrier pricing, and possibly pay-as-you-go billing and claims support, depending on your carrier.
  • Required anyway: in North Dakota, Ohio, Washington and Wyoming, coverage has to come from the state fund, so workers' comp is effectively carved out there regardless.

For many trades businesses, the carve-out is the whole point. It's how a company most PEOs won't insure for workers' comp can still offer its team large-group health plans. Our guide to the best PEO for health insurance compares those plans.

How to choose a high risk PEO service

Ask every PEO the same questions, in writing:

  1. Will you write all of our class codes, in every state where we have employees?
  2. Who is the workers' comp carrier, and is it the PEO's own or a partner?
  3. Is coverage on a master policy, a policy in our name, or can we keep our own?
  4. What rate per $100 of payroll will we pay for each class code, and what experience mod does it assume?
  5. Who manages a claim from the first report to closure, and who will we call?
  6. Do you offer a return-to-work program and site safety inspections?
  7. Are there minimum premiums, claim fees or enrollment fees?
  8. If we carve out workers' comp, can we still join your health plans, and does the admin fee change?

The hard part is knowing which PEOs will even quote you. Appetites change, and a decline from one PEO tells you little about the next. Our guide to the top PEO companies covers who serves which industries, and a PEO broker can send one census to the PEOs whose appetite fits.

Running a construction, trades or other high-risk business and getting declines? Book a 20-minute call with me. Bring your class codes, payroll by code, experience mod worksheet and three years of loss runs, and I'll tell you which options are realistic.

Frequently asked questions about high-risk PEO services

Why won't my PEO cover my construction company?

Many PEOs limit or exclude high-injury industries because, as a co-employer, the PEO shares responsibility for workers' comp and often carries part of the claims cost. Justworks, for example, says it can't support high-risk manual labor such as construction. A PEO that specializes in high-risk work may still quote you.

Can a high-risk business get health benefits through a PEO?

Often, yes. Some PEOs let you keep your own workers' comp policy, called client-secured coverage or a carve-out, while your team joins the PEO's health plans. Whether that's allowed depends on the PEO, its carriers, your size and your state.

Does a PEO lower workers' comp premiums for high-risk companies?

Sometimes. A PEO may have carrier programs, pay-as-you-go billing and claims management that help control costs, and a lower experience mod reduces premium over time. But a PEO can also charge more than a standalone policy, so compare rates class code by class code.

Who handles workers' comp claims in a high-risk PEO?

It depends on the PEO. Some only pass claims to the carrier. Others manage the claim from the first report through investigation, return to work and closure, working with the carrier or a third-party administrator. Ask who your contact will be when someone gets hurt.

Sources

This article is general information, not legal, tax or insurance advice. Workers' comp rules, carrier appetites and PEO policies change and vary by state. Figures are as of October 2026 unless a different date is shown.