Workmen Compensation Policy/WC Policy

The Workmen Compensation Policy covers the legal liabilities of the employer by providing financial compensation to their employees in case of work-related injuries or mishaps. The policy provides complete financial support to workers for medical expenses, rehabilitation, and lost wages caused by temporary or permanent disability due to work-related incidents.

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What is Employees Compensation/Workers Compensation?

Worker's Compensation is a legal obligation mandated by government regulations, requiring employers to offer insurance benefits to their workforce in accordance with the Workmen Compensation Act of 1923.

This legislative mandate ensures that in the unfortunate event of accidents, employees have access to financial security. This provision serves as a vital means for employees and their families to cope with the repercussions of unforeseen circumstances, thereby fostering a safer and more secure work environment.

Why do You Need Workers Compensation Insurance Policy?

Here are some of the reasons why all employers should buy 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 insurance, you are protecting both yourself and your employees.
  • If the worker is unable to work due to injury then the employee compensation insurance policy will provide the insured with a monthly income 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 workmen compensation policy can be expensive, so it is better to purchase this insurance policy.

Types of Workmen Compensation Policies

There are two types of WC Policies or 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 workers or employees.

What does Workers Compensation Insurance Policy cover?

The workers compensation insurance or WC 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

Workmen Compensation Policy Period

  • 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.

Workmen Compensation Insurance Policy: Add-ons

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

  • Sub-Contractors Cover: If a contractor hires a sub-contractor, and the sub-contractor does not have an employee 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 hospitalized for more than 24 hours.
  • Terrorism: There is an add-on for terrorism in the workers compensation insurance policy. It can provide coverage for the loss or damage caused due to terrorist attacks.

Workmen Compensation Policy/ WC 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 1923/Employees Compensation Act 1923.
  • Diseases that are specified in part ‘C’ of Workmen’s Compensation Act, 1923.
  • Any changes made in the policy after the workmen compensation policy is active will not be covered.

Conditions Regarding Workman 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 workman, 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 Workman 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 Policy

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 Workmen Compensation 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. This is how you can find a suitable WC policy for your business.

Labour Insurance/Workmen Compensation Policy Claim 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 workman compensation commissioner sends any notice, forward it to the insurer.
  • At the same time submit a claim form along with relevant documents.

Workmen Compensation Policy: Required Documents

The documents required for all kinds of claims under a WC policy are as follow:

  • 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

The documents required in case of fatal claims under a workmen compensation insurance 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 Employees Compensation Act 1923.

Workmen Compensation Policy- FAQs

  • Q: What is WC Policy?

    Ans: A Workers' Compensation policy / insurance for labour commonly denotes an insurance policy designed to provide medical benefits and wage replacement to employees experiencing injuries or illnesses directly related to their work.
  • Q: Who is accountable for providing the advantages under the Workman Compensation Act?

    Ans: The employer is 100% responsible for providing all the benefits underwritten in the labour policy or WC policy within 30 days from the date when the claim is made. In certain circumstances, the employer directly settles the claims or sometimes by providing a labour insurance policy to its employees.
  • Q: Is it a good idea to purchase a worker compensation insurance policy online?

    Ans: Yes, it is the best and easiest way to purchase a WC insurance policy online. This is because you can compare different plans provided by different companies and calculate the premium amount using the online premium calculator.
  • Q: What Does Employee Compensation mean?

    Ans: Workers compensation is an Act that came into effect in 1923. It mandates the right to get coverage for injury, disability and death resulting from an accident for employees. Under this act, employers are obligated to provide financial aid for medical expenses or to the employee’s dependents in case of death.
  • Q: Who is eligible for workmen compensation?

    Ans: Eligibility for workmen compensation includes:
    • Contractual Employment: Entities or individuals employing workers on contract.
    • Maritime Operations: Shipping ports, companies, docks, and ship owners.
    • Construction Sector: Civil engineering firms and contractors.
    • Agricultural Employment: Farming companies engaging workers in harvesting, farming, and processing.
    • Nuclear and Mining Industries: Firms involved in nuclear mining, reactor operations, and related activities.

    *Note: This list is not exhaustive, and eligibility may vary based on local regulations.

  • Q: How sum insured is calculated in a workmen compensation policy?

    Ans: The sum insured in a workmen compensation policy is typically calculated based on factors such as employees' annual wages, the number of employees, the nature of work and associated risks, legal requirements, industry standards, and coverage limits specified in the policy. The calculation may vary among insurance providers and jurisdictions.
  • Q: Who is liable to pay workers' compensation?

    Ans: Employees' compensation, commonly known as workers' compensation, is typically paid by the employer.
  • Q: What is the difference between WC policy and ESIC?

    Ans: WC Policy or a labour insurance policy is the voluntary insurance for work-related injuries, purchased by employers. ESIC, on the other hand, is a mandatory social security scheme providing comprehensive benefits, managed by the government.
  • Q: How is WC policy calculated?

    Ans: Workers' Compensation (WC) policy premiums are typically calculated based on the following factors:
    • Nature of Work.
    • Total Annual Wages
    • Classification of Industry
    • Previous Claim History.
  • Q: What is the claim amount for WC policy?

    Ans: The claim amount for a Workers' Compensation policy covers medical expenses, lost wages, and permanent disability, varying based on the injury's nature and severity, subject to jurisdictional regulations.

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Policybazaar for Business - Workmen Compensation Insurance - Customer Reviews
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4.2/5
Based on 92 reviews
4.2
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Based on 92 reviews
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4.3 June 28, 2023
Abha
Positive Experience
Thank you, PolicyBazaar, for providing such a positive experience and ensuring that well-being of my employees and business!
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4 June 18, 2023
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Provides Financial Security
I purchased Workmen Compensation Insurance from PolicyBazaar for my business owner looking to secure their employees' welfare and protect their business interests.Thankyou. Worth buying.
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3.8 June 08, 2023
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3.8 May 06, 2023
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Mumbai
3.8 April 30, 2023
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I bought Workmen Compensation Plan from the Policy bazaar website online for our workers in my industry to get protetion aganst any Accidental miss happening caused to them. It offers amazing deals which provide them with medical coverage and help me to get instant protection against any loss. Thanks, PolicyBazaar.
Madurai

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