Workers’ compensation insurance is one of the most significant expenses for businesses, particularly those related to high-risk industries with sizable payrolls. Workplace injuries and illnesses can become costly affairs. Also, it is mandatory by law for employers to pay compensation for work-related accidents. It is, therefore, better to buy a workmen’s compensation insurance policy online to avoid paying from your pocket for the huge compensations or medical expenses arising out of these accidents.
Which factors determine the premium of a Workmen’s Compensation insurance policy?
Selecting the right worker compensation policy often becomes as much a question about finances as it is about proper coverage. For small businesses especially, the cost of insurance needs to be taken into consideration. It is crucial to understand how premiums are calculated before buying a workmen’s compensation policy online or offline.
Safety departments and human resources professionals are usually in charge of analyzing the many factors that influence the workmen’s compensation insurance premium. Once you understand the basics of premium calculation, it’s easier to identify areas where you can reduce your costs.
Below are some of the crucial factors that affect the WC premium:
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Industry Type
The risk of workplace hazards is present in every sector. It is the degree of this risk that differs. For instance, physically demanding work usually has higher risks involved in terms of workplace injuries. People working in industries such as manufacturing units, mines, or transportation have exposure to a more hazardous environment leading to injury or health issues. That is why workmen’s compensation insurance premium varies widely by industry and job type.
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Number of Employees
The number of employees also affects the premium you need to pay while buying a workmen’s compensation policy online. The more people you have hired in your firm, the higher the premium will be. It is difficult to pay for compensation without insurance. It is, therefore, crucial to safeguard your business from legal liabilities, irrespective of the size of your organization.
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Duration of The Policy
The period for which you buy the policy also determines the cost of your premium. For instance, if you buy the plan for a term of one year, your premium will be lower in comparison to a policy with two years of tenure. You can even ask your insurer for a discount while buying the policy for a longer period. Also if there is no claim in your existing policy, then you may get a discount on your renewal premium.
Additional Read: Does Premium of Workmen Compensation Policy Change Every Year?
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Safety Standards
Every organization has its own set of safety regulations as per law. The premiums of workmen’s compensation policy do depend on how strict the safety norms are. For instance, if you own a factory that has a risk of catching fires and you have a proper setup for extinguishing in case of a casualty, your premiums could be lower than they’d be otherwise.
Practising effective risk management techniques can also lower your premium. It also reduces the chances of claims arising out of workplace mishaps. As an employer, it is your duty to minimize accidents at the workplace.
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Past Claim Experience
If your organization has a history of claims, your premiums may be higher than usual. To an employer, it creates the impression that your workplace has high-risk factors associated with it — and it is more likely to claim in the future too.
Apart from all these factors, it is important to compare the workmen’s compensation quotes from different insurance providers before buying one. This will ensure that you get good coverage at a reasonable premium. Also, you will have a better understanding of what is covered under your policy.
