Workmen Compensation Insurance/ WC Policy

What is the Employee’s Compensation Act?

The Employee’s Compensation Act, 1923, is a fundamental labour law in India designed to ensure that employees receive financial protection if they suffer an injury, illness, or death arising out of and in the course of employment. The Act imposes a legal obligation on employers to provide compensation for workplace-related incidents, covering aspects such as wage loss, permanent or temporary disability, and benefits for dependents in the event of death.

It was introduced to create a fair system where workers and their families are not left vulnerable after an accident, and employers have a clear framework to follow for compensation and liability. The Act outlines how compensation should be calculated, when it becomes payable, and the responsibilities of all parties involved.

What is Workmen Compensation?

Workmen Compensation refers to the statutory obligation of an employer to provide financial support and medical benefits to employees who suffer injuries, illnesses, or death arising out of and in the course of employment. It ensures that affected workers receive compensation for medical expenses, wage loss, disability, or dependents’ support, while protecting organisations from direct legal liabilities under the WC Act, 1923.

Why Do You Need Workmen Compensation Policy?

Here are some of the reasons why all employers should buy workmen compensation insurance coverage:

• Workman Compensation Insurance can protect your business from lawsuits related to employees' injuries.
• You can get coverage for temporary and contract employees. Many workmen compensation insurance policies will cover temporary and contractual employees.
• By having a WC policy, you are protecting both - yourself and your employees.
• If the worker is unable to work due to injury, then the WC insurance policy will provide the insured with a monthly wage until the worker can return to work.
• Workmen Compensation Insurance also covers death benefits if an employee is fatally injured while on the job.
• Fines and penalties for not having the Policy can be expensive, so it is better to purchase this insurance policy.

What Does Workmen Compensation Policy Cover?

The workers compensation insurance provides coverage for the following:

1. Death Benefits: WC policy offers financial support to the dependents of an employee who loses their life due to a workplace incident.
2. Accidental Injuries: The policy covers medical expenses and compensation for injuries that occur during the course of employment.
3. Work-Related Illnesses: The Workers Compensation Insurance provides coverage for occupational diseases. They refer to health issues or diseases caused by exposure to harmful conditions or substances at work.
4. Disability Coverage: The policy also compensates employees with partial or permanent disabilities due to workplace accidents or injuries.
5. Temporary Disability Benefits: WC policy ensures financial assistance for employees unable to work temporarily while recovering from a work-related injury or illness.
6. Legal and Approved Expenses: The policy covers legal fees and additional costs incurred with the company's approval, especially in cases requiring legal involvement.

WC Policy: Add-ons

Here are the add-ons provided under the WC Policy:

• Subcontractor Cover: If a contractor hires a sub-contractor, and the sub-contractor does not have a Workmen Compensation Policy, the contractor can opt for the sub-contractor add-on cover in this case.
• Medical extension: The employer can purchase the medical extension add-on. However, it will only be applicable when the workman has been hospitalised for more than 24 hours.
• Terrorism: There is an add-on for terrorism in the Workers Compensation Insurance. It can provide coverage for the loss or damage caused due to terrorist attacks.

What Does Workmen Compensation Policy Not Cover?

The workers compensation policy does not provide coverage for the following conditions:

• Injuries that are not fatal.
• No coverage for the initial 3 days of disability where total disablement is less than 28 days.
• All the injuries that do not cause partial disablement for more than 3 days.
• Accident or injury caused under the influence of alcohol or drug.
• Liabilities faced by the employees of contractors.
• Liability of the insured is assumed under an agreement.
• The employees who are not considered workers according to the Workmen Compensation Act 1923 / Employees Compensation Act 1923.
• Work-related diseases/injuries specified in part ‘C’ of ‘Workmen’s Compensation Act, 1923.
• The policy will not cover any changes made after the Workmen Compensation Policy is active.

Types of Workmen Compensation Policies

There are two types of labour insurance policies: 

1. Named: In this policy, the names of employees will be explicitly mentioned in the policy copy.
2. Unnamed: In this policy, it is not obligatory to specify the names of employees.

Conditions Regarding Workmen Compensation 

The compensation to be paid by the employer depends on the age of the workman, the nature of his injury and the average monthly salary or wages paid to him. However, the minimum and maximum compensation rates are fixed for death and disability, subject to timely revisions. Furthermore, in the event of a worker's death, the employer must compensate their dependents.

The Ministry of Labour & Employment in India has formed the ‘Social Security Division. It is responsible for framing social security policies for the workmen and ensuring their implementation as well as enforcing the Workman Compensation Act in India. However, the various state governments administer the act through Workmen’s Compensation Commissioners.

Amount Payable Under Workmen Compensation Policy

Refer to the table below to learn about the amount payable under the employee compensation/ WC policy:

*Central Government notification prescribed that the maximum amount of wages considered for compensation is Rs 15,000/month.

Workers Compensation / WC Policy Claim Process

Follow the steps below to raise a claim under the workers compensation policy:

• Claim Intimation: Inform your relationship manager about the incident.

• Claim Form Submission: Fill out and submit the claim form they shared. 

• Claim Reference Number: The information you provide will be sent to the insurance company for evaluation and claim registration, leading to the issuance of a claim reference number.

• Documentation: Submit all the required documents for further processing. 

• Claim Settlement: After approval, the insurance company will release the claim amount.

Note: The insurer will thoroughly review the terms and conditions of your policy to assess the coverage applicability regarding the claimed incident. Consequently, the determination of claim acceptance or rejection will be at the discretion of the insurer. 

WC Insurance Policy Required Documents

The documents required for all kinds of claims under the workers compensation policy are as follows:

• Duly filled and signed claim form
• Medical bills
• Records of Compensation

For permanent disablement claims

• Medical certificate related to disablement
• Memorandum of agreement as per the WC Act between the insured employer and the injured workmen

For temporary disablement

• Medical certificate related to the disablement

The documents required in case of fatal claims under a Workers Compensation Policy are as follows:

• Death certificate
• FIR, if any
• Postmortem report copy
• The statement given by witnesses, if any
• Duly filled Form ‘A’ given by the Employees Compensation Act 1923.

Workmen Compensation Insurance Policy Period

The policy period under workers compensation coverage is as follows:

• The minimum policy period is 1 Month
• The maximum policy period is 12 Months 

Note: A minimum of 2 employees is required, and the maximum count depends on the insurer's terms.

How Much Does Workers Compensation Insurance Cost?

The cost of a Workmen Compensation Insurance policy depends on how likely a workplace injury is within a particular business and the potential value of a resulting compensation claim. Since every industry carries a different level of risk, the premium for a factory or construction unit will naturally be higher than that of a low-risk environment such as an office or retail outlet.

Several key elements influence how the premium is calculated, including:

• Nature of business activities: Industries involving machinery, manual labour, or hazardous conditions typically attract higher premiums than desk-based operations.
• Total workforce: A higher number of employees increases exposure and therefore raises the overall premium.
• Job classifications: Different categories of workers face different levels of risk, and premiums are adjusted accordingly.
• Employee salaries/wages: Compensation payouts are linked to wage levels, making this an important factor in pricing.
• Location of operations: Workplaces situated in regions with higher risk profiles or stricter regulatory norms may see variations in premium rates.
• Safety practices and compliance: Companies with strong safety protocols, training programmes, and effective loss-control measures often benefit from better premium terms.
• Past claim history: A clean claims record can help reduce premiums, whereas frequent or severe past claims may increase them.

How to Find a Suitable WC Policy Online?

Various insurance companies offer Employee Compensation Insurance online. One may get confused while selecting the most suitable policy. Additionally, worker compensation insurance also needs jurisdiction that comes in the business area of the prospect.

However, if one takes the help of an insurance web aggregator to compare different Workers Compensation Insurance plans, he/she can get the most suitable option. A reliable web aggregator asks certain questions to the prospect and shows the result based on these. This is how you can find a suitable WC policy for your business.

Why Should You Buy Workmen Compensation Insurance from Policybazaar for Business?

• Expert Consultation: Our business risk consultants provide personalised advice tailored to your needs and preferences.
• Year-Round Claim Support: Our claim specialists are available throughout the year to ensure smooth claim settlement.
• Dedicated Relationship Manager: You will be assigned a dedicated relationship manager to offer continuous support and guidance, helping safeguard your business against potential risks.
• Competitive Quotes: Leveraging our extensive network of insurer partnerships, we offer competitive quotes from top insurers, ensuring you get the most favourable rates without compromising service quality