Workers/Workmen Compensation Insurance Policy

The Workmen Compensation Policy allows employers or contractors to provide compensation to workers and their families in case of death or bodily injury (permanent partial disablement / permanent total disablement / temporary disablement) resulting from workplace accidents. WC policy covers injuries and accidents that occur during the course of employment.

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Workmen/Workers Compensation Act in India

The Workmen Compensation Act, 1923 is an employee compensation act that makes it mandatory for employers to pay employees for any work-related injury or disability. The act was created to help protect workers from the financial burden of work-related injuries and disabilities. The policy provides coverage to employees who get injured or disabled due to a work-related accident in places like factories, construction sites, mines, plantations, etc.

Why do You Need Workers Compensation Insurance Policy?

Here are some of the reasons why all employers should buy a workmen comp. insurance cover:

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

What does Workers Compensation Policy cover?

The policy provides coverage for the following:

  • Injury caused due to an accident during employment.
  • Partial and permanent disability
  • Temporary disability or Death
  • Legal costs as well as expenses incurred with the company's consent

Workers Compensation Policy: Add-ons

Here are the add-ons provided under WC Policy:

  • Sub-contractors cover: If a contractor hires a sub-contractor and that sub-contractor does not have a workmen compensation policy then in this case the contractor can opt for the sub-contractor add-on cover.
  • Medical extension: The employer can purchase the medical extension add-on but it will only be applicable when the workman has been hospitalized for more than 24 hours.
  • Terrorism: There is a terrorism add-on that can provide coverage for the loss or damage caused due to terrorist attacks.

Workers Compensation Policy: Exclusions

The workers compensation insurance 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 lesser 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.
  • Diseases that are specified in part ‘C’ of ‘Workmen’s Compensation Act, 1923.
  • Any changes made in the policy after the policy is active will not be covered.

Conditions Regarding Worker 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. In case of the death of the workmen, the employer is supposed to pay compensation to the dependents of that workman.

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 workmen compensation Act in India. However, the various state governments administer the act through Workmen’s Compensation Commissioners.

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Amount Payable Under Insurance Workmen Compensation

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

Nature of Claim Amount of Claim
Accidental Death (50% * Age Factor * Wages) OR Rs 1,20,000 Whichever is higher
Permanent Total Disability (60% * Age Factor * Wages) Permanent Total Disability Or Rs 1,20,000 Whichever is higher
Permanent Partial Disability Loss of earning capacity prescribed by a medical practitioner/Based on % disability * Age Factor * Wages
Temporary total disability 25% * No. of days of absence/disability * Wages / 15
*Central Government notification prescribed that the maximum amount of wages considered for compensation is Rs 15,000/month.

How to Find Suitable Employee/Labour Insurance Policy Online

Various insurance companies offer Employee Compensation Insurance/labour insurance policy plans online and one may get confused in selecting the most suitable policy. Moreover, 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 keyman 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 them. This is how you can find a suitable WC policy for your business.

Workman Compensation Insurance: Claiming Process

Follow the steps below to raise a claim under WC Insurance Policy:

  • Inform the factory inspector if an accident happens in the manufacturing plant.
  • Then the insured employer will send a written notice to the insurance company about the disablement or death of the workman.
  • A trained investigator is appointed by the insurance company to cross-check the authenticity of the raised claim.
  • Collect all the information and documentary evidence as the insurance company may require.
  • If the workmen compensation commissioner sends any notice, forward it to the insurer.
  • At the same time submit a claim form along with relevant documents.

WC Insurance Policy: Required Documents

For all kinds of claims:

  • 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 insured employer and injured workmen
  • For temporary disablement
  • Medical certificate related to the disablement

In case of fatal claims:

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

Workmen Compensation Policy- FAQs

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Policybazaar for Business - Workmen Compensation Insurance - Customer Reviews
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Based on 92 reviews
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Based on 92 reviews
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4.3 June 28, 2023
Positive Experience
Thank you, PolicyBazaar, for providing such a positive experience and ensuring that well-being of my employees and business!
4 June 18, 2023
Provides Financial Security
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4 May 11, 2023
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3.8 April 30, 2023
Instant Protection Against Accidental Misshappening
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