How Expensive is Worker's Compensation Insurance?

Workmen insurance policy is a government-mandated legal obligation that every employer must fulfil under the Workmen Compensation Act 1923. Under this law, employees must be provided with financial assistance in case of any unforeseeable incident while performing their professional duties.

The cost of workers' compensation policy premiums is affected by several factors. Some of the most common and important factors are as follows.

Type of Coverage: The workmen's insurance policy provides two types of coverage: Table A, which covers the Workmen's Compensation Act 1923, Fatal Accidents Act 1855, and Common Law, and Table B, which provides cover for only the Fatal Accidents Act 1855 and Common Law. The coverage determines the workers' compensation insurance premiums.

Type of Industry: Working in specific industries like construction or manufacturing has evidently involved more risks than some other industries. Thus, buying workers' insurance policies for such industries can cost more than for some other industry professionals.

Payroll and Business Size: Another deciding factor for workers’ insurance compensation costs is the payroll and size of the business. Businesses with a higher number of employees have to pay for employee policy premiums, and workers’ compensation insurance for small businesses have a lower financial burden due to their reduced workforce size and lower premiums. Moreover, employee classification and the type of work involved also affect the premium. For example, a company that hires workers performing predominantly office jobs may have lower premiums than that of factory workers.

Industry Track Records: Before providing a worker's insurance policy, insurance companies check the industry-wise claim records. If the industry-wise records show that it is a risky industry with a high workmen's compensation claim ratio, then the insurance premium goes up. However, if the records show that the industry is safe or takes safety measures seriously, then there might be chances of getting a lower insurance premium quote.

Company Claim History: The next factor that affects the cost of workers' compensation premiums is the company's claim history. If the company has a history of higher claims and negligence or poor safety guidelines at the workplace, then the premium price for the policy will be high. Companies with low claim records and safer workplaces might get discounts or be offered lower premium prices.

State Regulations: All the states in India mandate the compliance of workmen's insurance policies for all companies. However, there might be slight differences in the state's rules for policy prices, which affect the rate at which companies are offered the policy.

Before an organisation buys worker’s compensation insurance, they must consider confirming that the insurance includes these crucial factors:

Coverage: The insurance must include adequate coverage for medical care, rehabilitation, death services and lost wages.

Claim Procedure: Make sure to check that the insurance company that you choose has good reviews and records of swift and smooth claim settlement procedures. An easy claim settlement procedure is necessary for employees so that they can get their claim amount on time.

Risk Management System: Several insurance providers also help create a safe working environment at your workplace. These services include recognising and taking steps to reduce the risks, offering safety training, etc. Select sure insurance providers, as they not only assist you with employee claims in case of any incident but also help you avoid them altogether.

Service: The insurance provider must have good customer support service to help you and the employees throughout the process of the claim procedure and after that too.

The workers' compensation insurance cost may seem like a burden to companies. However, it is beneficial for them and their employees in the long term, as it saves them both from financial and legal strains in case of any unforeseeable incident.

Moreover, as you are now aware that there are several factors that affect the worker comp insurance price. By keeping these factors in mind, you can make an informed decision.

To buy good insurance for workmen compensation, you should check reputable insurance providers like Tata AIG, who provide several insurance benefits and features.

You can also check other business insurance in India by us for protection against other specific damages.

What type of workers' compensation is the most common?

The most common type of workers' compensation claims are related to injuries like fractures, cuts and punctures, concussions, strains and sprains.

What is the complete form of WCP?

WCP stands for Workmen Compensation Policy, which is a mandated policy that every employer needs to buy for their employees to pay in case of any accident or demise while the employees are performing their duties.