What is the right price for workmen compensation policy?
A workmen’s compensation policy provides comprehensive scope of coverage to the organization. The policy covers physical injuries, permanent or temporary disablements and even death of the organization’s employees due to unforeseen perils of employment.
Moreover, there is a range of policy extensions available that help in increasing the scope of coverage of the policy. The sum insured is also usually considerable. As such, many policyholders do not understand the right price to pay for the policy.
Let’s first understand how the premium is determined for this policy
Workmen compensation premium calculation
The workmen compensation premium depends on the tariffs set by the Insurance Information Bureau. The premium is calculated based on –
- The nature of the organization
- The type of employment the insured workers are engaged in
- The average compensation payable
Coverage under the policy is granted in two distinct tables. Table A covers the Workmen’s Compensation Act, 1923, Fatal Accidents Act, 1855 and Common Law while Table B covers only the Fatal Accidents Act, 1855 and Common Law. The premium is, therefore, determined for each table separately.
The premium usually lies between Rs.10 and Rs.170 per Rs.1000 sum insured and there is also loading for administrative and distribution expenses of the insurer. Then the workmen compensation cost for each employee is multiplied by the number of employees of the organization to find the premium payable.
Factors determining workmen compensation premium
When doing workmen compensation premium calculation, there are different factors considered by the insurer in determining the premium cost. The factors include the following –
- Type of industry to which the organization belongs
Some industries are taken to be riskier than others. For example, the mining industry is riskier than the transportation industry. So, depending on the industry, the risk is estimated and the premium is computed. The riskier the industry, the higher would be the workmen compensation premium cost.
- Number of employees to be covered
The larger the number of employees to be insured under the policy, the higher would be the premium rate because the premium is calculated per employee.
- Compensation payable
If the compensation payable in a claim is high, the successive premium would be high and vice-versa.
- Coverage duration
You can buy a workmen’s compensation policy for one year or longer. Needless to say, the longer the tenure, the higher would be the aggregate premium payable. However, in some cases, insurers might offer a premium discount for choosing a multi-year policy.
- Claim experience
The past claim experience would also affect the workmen compensation premium. If there had been a claim in the last policy year, the premium would be increased in the next year.
Options to pay workmen compensation premium
You can pay the premium of your WC policy through different modes like cash, cheque, demand draft, debit or credit card, net banking, RTGS or NEFT, UPI, mobile wallets, etc.
How to minimize workmen compensation premium?
There are ways in which you can minimize the workmen compensation cost. These ways are as follows:
- Compare different workmen compensation policies based on their coverage and premiums. Comparison helps you pick the policy with the best deal
- Take steps to manage risks at the workplace eg installing skid-resistant floors
- Try and buy the policy online
- Look for discounts offered by insurance companies
- Try and maintain a good claim history
- Try and buy a multi-year policy for premium discounts
What is the right price for workmen compensation policy? Additional Read: How to decide the Insurer in Workers’ Compensation?
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