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What is Workmen Compensation Insurance?
Workmen’s Compensation Insurance (which is also known as Workers' compensation insurance or Employees Compensation Insurance) is a type of insurance policy that is there to provide coverage for your business’s employees who are injured or become disabled as a result of their jobs.
Even if you take all kinds of preventive measures, workplace accidents can unfortunately occur, and having this insurance will provide your employees with compensation without leaving your business at a financial loss.
For example, if you own a construction business, and on a worksite, something falls from a higher level and onto one of your construction workers, causing them to break their leg. If you don’t have workers’ compensation insurance, they can sue and claim compensation from you for their medical expenses. This can end up costing your business significantly.
Workmen's compensation insurance is set out under the Workmen's Compensation Insurance Act, 1923 and is there to protect you financially while still providing your employees with help in such situations.
How important is a Workmen’s Compensation Insurance?
What does a Workmen Compensation Insurance cover?
When you get a Worker Compensation Insurance, you and your employees will be protected in case of...
NOTE: Please refer to your policy wordings for detailed information about coverage, exclusions, and conditions.
Advantages of Workmen Compensation Insurance Policy
If any of your employees are injured during the course of their work, they can file a lawsuit against you (their employer) in a civil court for damages for this injury. Such lawsuits, and any medical costs can end up costing your business a lot. But, a Workmen’s Compensation Insurance your employees can get the help to recover from any such work-related injury or illness, while it also protects your business against financial losses.
What is excluded in a Workmen Compensation?
There are some situations where a Workmen Compensation insurance won't cover your business and its employees, such as:
How much does a Workmen Compensation Insurance cost?
The premium for your Workmen's Compensation Insurance is based on the risk of your business experiencing a claim from an injured employee and how much that claim might end up costing. Since this amount is based on the type of business you own, places like a manufacturing plant will have a higher rate than something like a beauty supply store.
There are a lot of relevant factors that go into calculating workmen compensation premiums, such as:
- The nature of your business’s operations - for example, a factory environment will pose more risk to your employees than an office.
- The number of workers.
- The specific type of work they perform (employees are classified.
- The salary or wages of your employees.
- The location of your business’s operations.
- The safety standards that your business meets.
- The past claims made against your business by its employees.
Types of businesses that need Workmen Compensation
Any type of business that has employees* might want to consider getting a Worker’s (or Employee) Compensation Insurance Policy. Some of these might be:
*In fact, it is mandatory for employers (especially manufacturing units) that have more than 20 employees, to have a Workmen's Compensation Insurance as per the Employees' State Insurance Act, 1948.
How to choose the right Workmen Compensation policy?
Things to remember before getting a workmen compensation
- Focus on safety and security precautions. Make sure your employees know all the essential safety measures and best practices, and that there are regular safety checks so that you can reduce even the potential for accidents and injuries.
- Have a process to manage any workplace injuries. If there is a system to handle an onsite work injury sustained quickly, you can prevent them from becoming more severe and both reassure employees and prevent medical costs from increasing.
- Always check what is and is not covered under your workmen compensation policy. For example, some standard policies may not cover medical expenses for occupational diseases. So, read through the terms and conditions so you won’t be surprised by anything later.
- Check that you pick the right Sum Insured amount. Remember that when it comes to calculating workmen compensation insurance, a higher sum insured means that your premium too will be higher. But getting a lower sum insured might mean that you won’t get sufficient coverage
- Evaluate all the factors together, consider the risks posed to your employees as well as the sum insured and the premium to find the policy that gives you the best value.