A Guide On Workers Compensation Insurance

You need to comply with various insurance obligations when opening a business in Australia. For instance, you must cover your employees with workers compensation insurance. Unfortunately, most new business owners do not comprehend how workers compensation insurance works. Below is a comprehensive guide on workers compensation insurance. 

What Is Workers Compensation Insurance? 

Workers compensation insurance covers permanent, casual, seasonal and on-contract employees employed by a business. Ideally, the insurance coverage compensates employees who suffer injuries in their line of duty. For example, an employee could suffer a fracture if they slipped on the premises. It is vital to note that workers compensation does not cover the business owner and third parties on the premises. You will need additional insurance, such as business owners or public liability insurance if you need additional coverage. 

Not all employees who suffer injuries qualify for compensation. For example, if an employee is injured as a result of a motor accident, your commercial auto insurance compensates them for their injuries. Conversely, employees who suffer injuries when committing crimes or off work hours cannot receive compensation under the workers compensation scheme. The general rule is to educate your workforce about the limits of workers compensation insurance. This way, they do not engage in negligent activities hoping to receive compensation for an injury. 

Why Should You Take Workers Compensation Insurance? 

Workers compensation insurance ensures that your business complies with statutory and professional association laws. Moreover, the cover helps improve the productivity of your workforce. Typically, your employees are confident working on your premises since they know they are covered in case of an accident. The coverage can also protect your business from insolvency. Remember, a class action suit against your company can paralyse your operations and bankrupt your business. For instance, take a situation where your workforce suffered a long-term illness after inhaling a dangerous gas. Finally, workers compensation insurance helps build your brand image. For example, some clients will only work with businesses that have this coverage. It is especially so if your employees work on the client's premises. 

How Is Workers Compensation Insurance Calculated? 

Most professional associations compel their members to take a specified amount of coverage. However, insurance companies consider different variables when calculating workers compensation insurance. For example, the insurer assesses the number of employees and the risks they are exposed to at the workplace. The insurer also examines your employees' salaries since an injured employee also receives compensation for lost wages. The secret is to ensure your coverage is up to date to avoid over-insurance or under-insurance.