The Right Price to Pay for Workmen's Compensation Policy
With multi-dimensions of work and services in manufacturing units, there is an increasing health hazard risk to employees, especially in certain industries. This has made Workers’ compensation insurance a necessity for many businesses. Additionally, this insurance type being a mandatory requirement for some industries, making a purchase decision for this policy has become extremely crucial. It has thus become essential to understand the right price to pay for the workmen's compensation policy.Read more
Get right expert advice
Hassle free policy
Benefits of Workmen Compensation Insurance Policy
Workmen’s Compensation Insurance provides financial support to employees and helps them recover from work-related injuries or illnesses. At the same time, it protects the business against financial losses.
- Legal Liability Coverage
- Vocational Rehabilitation Expenses
- Occupational Illnesses and Conditions
- Lost Wages Compensation
- Special Add-on Covers
Factors that determine the Price for Workmen Compensation Policy
Price is one of the major determinants before making a purchase decision. However, for this insurance policy, there are a few factors that determine the premium rates. The price for workmen's compensation policy varies from one industry to another based on the risk level. Similarly, other factors go into calculation for determining the price for workmen's compensation policy, these include:
- Nature of business: Workplace hazards can occur in any sector. However, the level of risk in each sector or business varies. For example, businesses involved in physically demanding work may face a higher risk of workers or employees getting injured as compared to the one which deals with desk jobs. Hence, the premium rates may widely differ based on the business activity and industry.
- Number of workers: There is a simple logic behind his determinant. The more the number of workers, the higher can be the number of claims.
- Salary or wages of the workers: Since the compensation to be paid depends on the average salary of the injured worker, their average salary also helps in determining the price for the workmen's compensation policy.
- Safety standards: Businesses are required to maintain specific safety standards for the well-being of their employees. Having adequate safety and precautions in place and following the same, lowers the chances of workplace accidents. Therefore, the extent to which the business follows the safety standards impacts the premium amounts.
- Claims history: The rule of thumb is, if the business has a history of recurring claims for workmen compensation insurance, the premium amount is likely to be higher. The insurer considers the business with high-risk factors thus, a higher probability of claims in the future.
An employer needs to statutorily compensate his employee in case of a workplace accident. The Workmen's Compensation Act of 1923 came into force to promote better living and underline the employer's responsibilities. To fulfill this obligation, the employer must make an informed decision, which includes the price for the workmen's compensation policy and other features of the policy.