Workers/Workmen Compensation Insurance Policy
Workmen compensation insurance, also known as workers' comp, is a type of insurance that provides financial protection for employees who get injured while working. In India, it is mandatory for all companies to have this insurance. The Employee/Worker Compensation Policy helps the employer financially compensate employees who are injured or die because of an accident that happened while they were working. Worker compensation covers injuries, disabilities, and deaths of employees caused by accidents during their job.
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Quick LinksWorkmen/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 a disease or gone worse by the conditions of the employment.
- 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 the maximum compensation rate is fixed for death and disability, subject to timely revisions. In case of the death of the workmen, the employer is supposed to pay the compensation to the dependents of that workmen.
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 |
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 for comparing 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 workmen.
- 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
-
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 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 labour insurance policy to its employees. -
Q: Is it a good idea to purchase worker compensation insurance policy online?
Ans: Yes, it is the best and easiest way to purchase a WC insurance policy online. It is because you can compare different plans provided by different companies and calculate the premium amount using the online premium calculator. -
Q: Is there a difference between The Employee Compensation Act and The Workmen Compensation Act?
Ans: When this compensation act came into effect the Government named it The Workmen compensation act and later on it was named the Employee compensation act. -
Q: What Does Employee Compensation mean?
Ans: The workers compensation is an Act that came into effect in 1923. It mandates the right to get cover for the injury, disability, death resulting out of an accident for the employees. Under this act the employers are obligated to provide financial aid for the medical expenses or to the employee’s dependents in case of death.
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