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A company is as good as its employees. It grows with time because of the employees’ hard work. If you own or run a company, you know well that your employees are almost your other family. They are your firm’s backbone and support you in all the ups and downs related to the business. Just like you take care of your own family, it’s your responsibility to look after your other family, i.e. the employees in your firm.
must already have ensured that your firm, organization or factory is a safe place to work. However, you can’t predict or fully prevent accidents or bodily injuries at your workplace despite all the safety measures. In the worst case, the injured employees may ask for hefty compensation, which may cause a significant financial hit to your company’s funds. That’s why you need a worker’s compensation insurance.
One common doubt that many business owners have is about the factors that determine the premium of a workmen insurance policy. The premium is not the same for every business and varies from one to another based on certain factors. If you want to know more before buying the policy, read on.
Here are a few significant factors that determine the premium of worker’s compensation insurance:
Type of Organization You Own
The type of organization you own has a significant impact on your workers’ compensation premium. The higher the risk of workplace hazards, the higher will be the premium. For instance, if you own an IT company, the major part of the workers’ job is to sit in front of a desktop. Your employees are thus less prone to workplace safety hazards as compared to an individual working in a factory or at a construction site.
The higher risk of hazards in the latter also implies a relatively higher frequency of claims that you would file. That’s why you need to pay a higher premium as per the risks associated with your workplace.
Number of Employees Working in Your Organization
In general, the premium of any insurance policy depends on the count of the insured individuals. The same is true when you buy a worker’s compensation policy for your employees. Premium rates increase with the increase in the number of employees that you want to insure under the same policy.
Let’s say you own a start-up that only consists of five to ten employees. Your worker’s compensation insurance premium rates will thus, be lower than the policy covering a well-established business with a higher number of employees.
Duration of the Contract
This factor depends on the desire of the policyholder. If you are looking to buy a worker’s compensation insurance policy for the short-term, your premium rates will be lower and vice-versa. On the other hand, the premium of the same policy will increase if you choose a longer tenure.
You can even get a discount on the premium when choosing a long-term workmen compensation insurance policy.
Before your insurance provider decides on the premium, they look at your previous claim history. Let’s say you had previously chosen a worker’s compensation policy and filed multiple claims during the policy tenure. This claim history gives your insurance provider an idea of the risk associated with offering you a policy. So, he may increase the premium accordingly.
On the other hand, if your history shows no claims filed, it means that you have set up enough safety measures to prevent workplace hazards. This can reduce the premium, as well.
Knowing about the factors affecting workmen compensation insurance premium gives you a better understanding of the policy. Also, it is advisable to take advice from insurance advisors, such as SecureNow, to find the most suitable policy that fits your business needs.