Workmen Compensation Insurance Policy Online

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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?

1

The fatal accidental incidental rate per 1,000 workers was  0.63% in 2014 (1) 

2

Industrial accidents caused 6,368 deaths in India from 2014 to 2017. (2)

3

In India, there were over 8,000 workplace-related accidents between 2014 to 2017. (3)

What does a Workmen Compensation Insurance cover?

Accidental Injury If your employees suffer any bodily injury due to an accident that occurred during the course of their employment.
Occupational Illness and Diseases Sometimes, workplaces can expose employees to some chemicals or allergens that can be harmful to them and cause illness. This policy will help cover any medical treatments if they get sick.
Disability Cover Workplace injuries may sometimes result in temporary or permanent disabilities (like loss of sight or limbs) and this insurance can help pay their medical bills and replace some of their lost wages.
Death Benefits In the unfortunate case that an employee loses their life in a work-related accident, it covers for any funeral costs and provides death benefits to their beneficiaries.
Medical Coverage Medical costs can be quite expensive, so this insurance covers your employees for any medical expenses from treating injuries due to accidents during their employment.

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.

This insurance will protect your employees in case of any injury or illness that is a result of their job, and help them back to work.

Protect your own business by reducing the risk of financial loss against financial losses in case one of your employees injured.

Having a worker’s compensation will limit your business’s exposure to lawsuits, as it covers your employees' work-related injuries.

It also helps protect your business by keeping it in line with The Workmen's Compensation Act, 1923.

You will also get additional protection from being sued, as once a claim is settled, employees can’t file any additional claims for that incident.

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:

It will not cover any employees of contractors (unless they are separately declared and covered)

It will not cover an employee who is not considered “a workman” according to the law

Any liabilities assumed under an agreement

If an injury doesn’t result in disablement for more than 3 days, or in the worst case, a fatality

The first 3 days of total disablement in cases where it lasts less than 28 days

It will not cover any non-fatal injuries that were caused by an accident that was due to being under the influence of alcohol or drugs  

Any non-fatal injuries caused by an accident that was due to the employee willfully disobeyed or disregarded the safety rules and regulations 

It will not cover non-fatal injuries caused by an accident due to some safety or guard device was willfully removal or disregarded  

Injuries that were caused by an accident that was a result of perils like war, invasion, or an insurrection 

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. 

If your business operations involve a lot of labor

Like, construction, transportation and logistics businesses.

If your business has a lot of employees

For example, Consulting firms, or I.T. companies.

If your business or company employs a lot of workers on a contractual basis.

How to choose the right Workmen Compensation policy?

Get the right coverage – The insurance policy should give you the best coverage for all your employees and any risks to your business.

Choose the right optional covers – Things like occupational diseases may not be covered under a standard policy, so consider the nature of your business and see if they will be beneficial to you.

Pick the right sum insured – Choose a workmen’s compensation policy that allows you to customize your sum insured based on the nature of your business and the risk to your employees.

Look at different policies – While saving money is great for your business, but sometimes the workmen’s compensation policy with the lowest premium might not be the best option for you, so compare the features and premiums of different policies to find one at an affordable price that works for your business.

An easy claims process – Claims are one of the most important parts of insurance, so look for a company that has easy to make claims and also a simple settlement process, as it can save you and your business a lot of hassle.

Extra service benefits – Lots of insurance companies also offer a lot of extras benefits, such as 24X7 customer assistance, easy-to-use mobile apps, and more.   

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. 

Common Workmen Compensation terms simplified for you

Employee Compensation Act 1923

The Worker’s Compensation Act 1923 (now called the Employee Compensation Act) states that “if a personal injury is caused to an employee by accident arising out of and in the course of his employment, their employer will be liable to pay compensation”.

Fatal Accident Act 1855

This act provides compensation for damages to the families or dependents of a person who died by an “actionable wrong by some wrongful act, neglect, or default of another person.”

Occupational Disease

This refers to any disease or illness that is caused (or aggravated) by the conditions of a person’s employment. For example, it does not cover things like when someone gets the flu from fellow employee. But if that worker contracted asbestosis due to exposure to asbestos during the course of their work. 

Permanent total disability

Any injury that is permanent and prevents the person from being able to work. This might include, blindness, paralysis, or loss of both legs.

Permanent partial disability

If an injury will not improve over time and leaves the person partially disabled. For example, loss of one leg, blindness in one eye or losing hearing in one ear.

Temporary disability

Here an injury creates a disability that prevents the person from working for a temporary amount of time, while they recover. Such injuries might include broken arms or an illness where your doctor says that you can’t go back to work right away.

Sum insured

It is the maximum amount that your insurer will pay in case you make a claim.

Deductible

This is a small amount that you need to pay out of your pocket before the insurer can cover your claim.

FAQs about Workmen Compensation Insurance Policy

Is workmen compensation policy compulsory in India?

It is mandatory for all employers (and manufacturing units) that have more than 20 employees, to have a Workmen's Compensation Insurance so that they have insurance benefits for workers or employees as per the Employees' State Insurance Act, 1948.

Employers and companies with fewer than 20 employees will still need to have this insurance to comply with the Workmen's Compensation Insurance Act, 1923 and the Indian Fatal Accidents Act, 1855. 

How is compensation calculated under Workmen Compensation Insurance Policy?

  • In the case that the employee has Died.
    • 50% of their monthly wage (based on relevant factors like age).
    • Funeral expenses of up to ₹5,000.
    • The minimum settlement amount is ₹1,40,000.
  • If the employee has suffered from a permanent total disability (like loss of eyesight).
    • 60% of their monthly wage (based on relevant factors like age).
    • The minimum settlement amount is ₹1,20,000.
  • In case the employee has suffered a permanent partial disability
    • A percentage of the employee’s salary is calculated based on the extent of the reduction of their earning capacity.
  • If an employee has a temporary disability.
    • Applicable if the employee/worker is disabled for more than 3 consecutive days.
    • 25% of their monthly wage (paid every half month).
    • The maximum period of compensation is 5 years.

Who is covered under workmen compensation insurance?

A workmen compensation insurance covers the employees (including those employed through a contractor but excluding casual employees) who is engaged by any commercial business against any injury caused due to an accident that occurred during the course of employment, as well as certain occupational diseases. 

Do contract workers or employees get covered under workmen compensation insurance?

Contractual employees can be covered as an extension if they are specifically declared under the policy.