Workers Compensation Insurance and the Issue of Premiums

By Herman White

All those people who are associated with construction business know how important workers' compensation insurance can be. In fact, there are people who now believe that this insurance should be used in all types of businesses, and that's correct as well. The reason is that accidents can happen in all sorts of businesses. Though the chances may differ, still no workplace is safe to work in.


Considering this important fact, it is important for employers to get workers' compensation insurance to stay away from facing any trouble. The biggest benefit of this particular insurance is that it keeps employers from facing any legal action, which is a big relief for sure.

However, when it comes to workers compensation insurance, there are few things that make living difficult for these employers. One of the most important things is an overwhelming increase in premiums. Due to consistent increase, workers' compensation insurance was the most important risk management issue during the 90's. But, the problem is still persisting to make it hard for employers to provide their workers with this particular insurance policy.

Although it is a fact that all states are finding it hard to deal with overwhelming increase in premiums, employers in states like Rhode Island, Maine, Texas, and Massachusetts are more in trouble due to an annual premium increase of 20% or more. This increase in premiums is a premier reason why employers are interested in finding another way to protect them from any legal action.

While it is true that there premiums are going up, it is also true that this increase is according to a set pattern. Moreover, when it comes to workers compensation insurance premiums, companies use different factors to determine the premium. For instance, the most important thing to consider is the base industry. It means all insurance companies take your industry into consideration in relation to the total claim occurred in your industry to determine what you need to pay as premiums. It is due to this particular reason that increase in premiums is not similar in all industries.

In addition to base industry, the amount of wages is also taken into consideration by insurance providers. This makes issuers know what they will be covering in case an accident takes place in a facility. So, they make certain changes in premiums according to the risk factor.

What it implies is that though there is an increase in premiums, it is not equal for all industries, which is due to certain factors. But, it is also true that you can reduce the total cost of workers' compensation insurance by taking certain precautionary measures for a safer workplace. So, take some actions on your own and you will see some reduction in the total cost of workers compensation insurance.

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