Major Coverages of Workmen’s Compensation Insurance in UAE

According to UAE government regulations, Workmen’s Compensation insurance is mandatory for businesses in UAE, especially in most free zones. It works as a safety net for employees and a protective shield for employers from ethical, social and legal hassles. This policy provides employees financial security in unprecedented cases of fatal workplace accidents. The provisions help employees and their families cope with the sudden financial and emotional setbacks caused by those mishaps. 

With it, employers can create a safer and more secure workplace environment across industries. Employees’ work-related injuries may bring hassles for the employers they work for. This insurance can save employers from that stress. An employer can easily fulfill their financial or legal liabilities when an unwanted incident occurs with any employee, including bodily injury, disease, death, etc. 

So, it is evident that including employee compensation insurance in a company’s policy is beneficial. However, in this context, a question always remains in employers’ minds – What are the exact coverages of workmen’s compensation insurance in UAE? So, this blog will highlight all essential points related to the workmen’s compensation insurance coverages. 

Workmen’s Compensation Insurance in the UAE: Who Requires it the Most?

According to the Labour Law in UAE, this workmen’s compensation insurance, however, is suitable for any business that runs with employees. It helps employees who suffer workplace accidents or illnesses pay the expenses from the mishaps. Moreover, it compensates for their income loss.

Anyway, workplace compensation insurance compensation coverage can prove extremely beneficial for industries like construction companies, the mining industry, businesses engaged in installation work, etc. Also, retailers, corporate workers, and others can include this in their company policies. Workers in diverse workplaces receive the necessary security and support in case of mishaps, ensuring their well-being and employers’ peace of mind. 

If injuries or losses occur outside the scope of employment, Workmen’s compensation insurance typically does not cover it unless extended facilities are applied. Injuries resulting from an employee’s deliberate misconduct may also be excluded from the coverages. In addition, if injuries are the result of their activities in a drunken state or under the influence of drugs, they may not be covered. Also, some insurance policies may not include coverage for intentional participation in high-risk activities, like taking a wilful part in risky jobs or off-duty sports events. Nonetheless, employers and employees need to understand all terms and conditions beforehand. 

The Major Coverages of Workmen’s Compensation Insurances in UAE: 

Workmen’s compensation insurance is designed to cover most financial responsibilities for employees’ “death, injury or sickness” resulting from an employer’s negligence or mistakes during employment. This strictly follows “Sharia Law” or other laws applicable in UAE. Also, the insurance mostly pays the additional expenses, including legal fees. However, the insurance broadly includes:
Medical Expenses Reimbursement: Workplace injuries often come with diverse medical expenses. Workmen’s compensation insurance includes coverage for all these medical expenses. The coverage range for every accident may range from AED 20,000 to AED 30,000 per person. Thus, it ensures that affected employees receive the required medical care without worrying about cost. 

Occupational death cover: In case an employee’s death takes place because of a workplace accident, the family gets essential financial help through this insurance. Thus, it makes up the income loss of the earning member.

Occupational disability cover: If an employee goes through any permanent total or partial disability caused by work-related accidents, they will receive compensation at a specified scale through Workmen’s Compensation insurance policy. It can support their future financial and emotional requirements. Anyways, in cases of temporary total disability, the insurance compensates the lost wages of the affected employees until their recovery period is completed. 

Expenses for Repatriation: The insurance also pays the repatriation expenses for any worker who lost his life to a fatal accident while working. In such an unforeseen event, Workmen’s Compensation Insurance covers major expenses for repatriating the mortal remains of the employee who has passed away. The amount may range from AED 10,000 to AED 25,000 per person. With this financial support, employers can ensure that the body is returned to the employee’s loved ones with safety and dignity.

Employer’s Liability Coverage: Besides compensating the employees’ losses, Workmen’s Compensation Insurance protects employers’ interests. It includes liability coverage for employers to pay the legal expenses for claims they bring up. Moreover, with extra protection, it ensures that a business does not have to face sudden hassles for any legal liabilities or challenges that may come up.

Non-occupational 24-hour Personal Accident: One added benefit of the Workmen’s Compensation Insurance policy is the 24-hour extension, which is not limited to work-related accidents. It covers non-occupational permanent total disability and death caused by personal accidents. So, with it, expenses for accidents occurring within the workplace premises and outside duty hours can also be covered. Thus, it protects employees 24×7, and employers can relax while fulfilling their responsibilities properly. 

Transportation Cover: The insurance can be extended to gain transportation cover, providing additional protection to employees during travel to and from their workplace. This coverage addresses the risks associated with transportation, such as accidents, injuries, or fatalities that may occur while employees are traveling to or from work.

With all these coverages, employees can get enough wage compensation and medical benefits and focus on steady recovery. And, employers can protect their right talents and avoid repeated recruitment hassles. 

The Calculation Process of Workmen’s Compensation Insurance Premiums in the UAE

The premiums of Workmen’s compensation policies are mostly calculated depending on a few factors. They include the industry type, nature of employees’ work, workforce size, estimated annual wages, the company’s claims history, etc. To calculate the premium amount, insurers often pay attention to the company’s annual payroll, classification codes, and the experience modification factor. Thus, the level of risk related to the employer’s organization is determined. Depending on the predicted risk level, insurance providers set a suitable amount as the premium that covers potential claims. Experts say employers can often eventually manage their payable amounts for workmen’s compensation insurance by maintaining an employee-friendly, safe, and secure workplace and handling claims properly.

Factors Affecting Workmen’s Compensation Insurance Premium

Some of the notable factors affecting workmen’s compensation insurance premiums as per labor law in the UAE are as follows: 

Employee Wages and Classification: Different work roles have diverse risk levels, which may bring variations in premiums. In addition, the total payroll of the employees also affects it, as given compensation is based on a percentage of the employee’s wages.

The Employee Count: The total strength of employees in a company who are to be covered under the policy is a vital factor also. Often, a larger workforce may result in a costlier overall premium.

Industry and Nature Of Work: The industry type and the specific tasks employees perform can affect the premium. For example, companies in industries with higher risk levels, like manufacturing or construction, may have to pay higher premium costs due to the frequent chances of accidents.

Workplace Safety Measures: If enough safety measures are implemented at the workplace, the premium amount for workmen’s compensation insurance can be reduced. Also, conducting training programs and risk management practices can help in this matter.

Coverage Limits and Add-Ons: The coverage limits provided by the insurance policy and any additional facilities are another crucial factor in deciding the premium rates. Higher coverage limits mean a higher premium amount.

Term of the Insurance: The policy duration strongly impacts the workmen’s compensation insurance premium. The premium will be higher if the coverage is provided for a more extended period.

Previous History of Claims: The employer’s previous claims history can also impact the premium. A higher number of claims often hints at a higher risk level. In those cases, premium rates may go higher. 

Factors Affecting Workmen’s Compensation Insurance Premium

Some of the notable factors affecting workmen’s compensation insurance premiums as per labor law in the UAE are as follows: 

Employee Wages and Classification: Different work roles have diverse risk levels, which may bring variations in premiums. In addition, the total payroll of the employees also affects it, as given compensation is based on a percentage of the employee’s wages.

The Employee Count: The total strength of employees in a company who are to be covered under the policy is a vital factor also. Often, a larger workforce may result in a costlier overall premium.

Industry and Nature Of Work: The industry type and the specific tasks employees perform can affect the premium. For example, companies in industries with higher risk levels, like manufacturing or construction, may have to pay higher premium costs due to the frequent chances of accidents.

Workplace Safety Measures: If enough safety measures are implemented at the workplace, the premium amount for workmen’s compensation insurance can be reduced. Also, conducting training programs and risk management practices can help in this matter.

Coverage Limits and Add-Ons: The coverage limits provided by the insurance policy and any additional facilities are another crucial factor in deciding the premium rates. Higher coverage limits mean a higher premium amount.

Term of the Insurance: The policy duration strongly impacts the workmen’s compensation insurance premium. The premium will be higher if the coverage is provided for a more extended period.

Previous History of Claims: The employer’s previous claims history can also impact the premium. A higher number of claims often hints at a higher risk level. In those cases, premium rates may go higher. 

Final Words

Workmen’s compensation broadly covers work-related accidents and their associated costs. It benefits employees, including laborers, to recover from mishaps and resume contributing to the company. At the same time, employers develop good reputations in the industry with workmen’s compensation insurance coverages from best-in-class insurance companies in their company policy. Thus, they can perform quality talent acquisition and flourish more, meeting their business goals. Hence, it is highly recommended that all employers in the UAE opt for workmen’s compensation insurance from trusted insurance providers.