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What is Workmen's Compensation Policy?

A workmen' compensation insurance policy serves as a financial safeguard for employees who get injured at work. In India, employers are mandated by different acts to protect their workers financially. The Workmen Compensation Act of 1923 mandates employers to pay compensation to their employees who work under hazardous situations. Schedule II of this Act makes workmen's compensation insurance mandatory for employers of plantations, mines, factories, mechanically propelled vehicles, construction works, and other unsafe occupations to protect the occupational rights of their workmen. These provisions of the Act are also extended to those who deal with Liquefied Petroleum Gas (LPG) and other such mechanical devices (for example, chefs in restaurants and hotels).

Why do you need a Workmen's Compensation Policy?
  • Financial coverage for employees who suffer injuries while on duty, ensuring their wellbeing and financial stability.
  • Most workmen's compensation policies include coverage for not only permanent staff but also for temporary and contract workers, extending the protective umbrella to all your employees.
  • Acquiring this insurance helps maintain legal compliance within your organization, ensuring you meet all regulatory requirements.
  • If an injury leaves a worker incapacitated and unable to perform their duties, this policy assures them a consistent monthly income, allowing them to focus on recovery without financial distress.
  • In the unfortunate event of a work-related fatality, workmen's compensation insurance steps in to provide death benefits, offering essential support to the bereaved family.
  • Investing in workmen's compensation insurance can shield your business from hefty fines and penalties, promoting financial security and reputation preservation.

What will a Workmens' Compensation policy cover?

Workmen's Compensation Insurance facilitates employers to offset the financial responsibilities related to their employees' work-related injuries or illnesses. Here's an overview of the principal protections provided by a standard workmen's compensation insurance policy in India :

Medical Expenses Coverage

The policy covers medical costs stemming from work-related injuries or illnesses. This includes charges for hospital stays, doctors' consultations, diagnostic tests, medications, surgeries, and other necessary medical treatments. Immediate medical needs, like ambulance services or emergency care, are typically included. The policy may also extend to rehabilitation costs like physical therapy, vocational training, and necessary aids that assist the employee's recovery and return to work.

Physical Injury Coverage

The policy includes coverage for physical injuries sustained by employees in the course of their employment. This comprises injuries occurring on the employer's premises, during work-related activities, or while traveling for work. The policy also covers associated medical costs, including hospitalization, doctors' fees, diagnostic tests, medications, surgeries, and rehabilitation services.

Death or Disability Coverage

The policy provides benefits for death or disability resulting from work-related accidents or occupational diseases. Compensation is extended to the dependents or nominees of a deceased employee. If an employee suffers from permanent or temporary disability due to a work-related incident, the policy provides compensation aligned with the degree of disability. It may also cover rehabilitation costs for disabled employees, including medical treatments, physical therapy, vocational training, and assistive devices.

Occupational Diseases Coverage

The policy extends coverage for occupational diseases as outlined in the Workmen's Compensation Act, 1923 and its amendments. To claim this coverage, the employee must provide medical evidence verifying that the disease is a direct result of their occupation or workplace environment. Upon confirmation, the policy covers the relevant medical costs, including hospital stays, doctors' fees, diagnostic tests, medications, surgeries, and other necessary treatments.

What's not covered?

Workmen's compensation insurance policies come with certain exclusions, which may vary depending on the insurance provider and the specific policy terms. Some commonly encountered exclusions in these policies in India are:
  • Assumed liabilities of the insured.
  • Injuries caused by war, foreign invasion, or mutiny.
  • Employees not classified as workers according to the Workmen's Compensation Act.
  • Penalties or interests imposed on an employee due to legal complications.
  • Accidents or death caused by self-inflicted harm or intentional aggravation of an injury.
  • Health issues or accidents occurring while the employee was under the influence of drugs or alcohol.
  • Liabilities pertaining to the employees of contractors.

Who needs a Workmens' Compensation policy?

Companies with a workforce of more than 20 employees are mandated by law to possess this form of assurance. As per the Employees' State Insurance Act of 1948, employers are obligated to extend insurance benefits to their employees. Claims under this assurance can be categorized into four types, namely accidental death, permanent total disability, permanent partial disability, and temporary total disability.
This policy is primarily designed to offer financial security to workers and their families in case of adverse workplace incidents.

You can raise a claim under WC insurance policy by following these steps :
  1. Start by notifying the factory inspector promptly if an accident occurs on your premises.
  2. Follow this up by formally informing the insurance company in writing about the worker's disability or unfortunate demise.
  3. The insurance company will deploy a professional investigator to confirm the veracity of the claim.
  4. Ensure that you provide any documents requested by the insurance company for further validation of the claim.
  5. If you receive a notice from the workmen's compensation commissioner, promptly forward it to your insurance company.
  6. Meanwhile, submit the claim form along with all necessary documentation to your insurance provider.

FAQs

What is the workmen's compensation act in simple words?
The Workmen's Compensation Act, 1923 is an Indian law that provides financial protection to workers who suffer injuries or disabilities while performing their job duties. The Act ensures that employees receive compensation for any injury, disability, or death arising out of and during the course of their employment. Under the Act, if a worker sustains an injury or dies due to an accident at the workplace, the employer is liable to pay compensation to the worker or their dependents. The compensation amount is determined based on the nature of the injury, the worker's monthly wages, and other factors. Since 2010, this Act has been known as the Employee's Compensation Act.
What is the difference between workmen's compensation and employee compensation?
There is no significant difference in the legal provisions or the purpose of the Indian law. Both 'Workmen's Compensation' and 'Employees' Compensation' essentially refer to the same concept of providing financial protection and compensation to workers who suffer injuries, disabilities, or death in the course of their employment.
Who is eligible for workmen's compensation?
The Workmen's Compensation Act or Employees Compensation Act applies to the following entities :
  • Employees working in mines, docks factories, plantations, oilfields, construction establishments, and other establishments listed in Schedule II of the Act.
  • Persons recruited for working abroad and those employed outside India, as mentioned in Schedule II of the Act.
  • Person recruited as the helper, mechanic, cleaner, driver or others in connection with a motor vehicle and to the members of the crew of an aircraft.
What is the process of WC claims?
The following process must be followed:
  • The insured must immediately notify the insurance provider of the occurrence of the incident.
  • If the accident occurs at a manufacturing facility, the factory inspector must be notified promptly.
  • The claim must subsequently be put forward in writing, together with all appropriate documents.
  • A representative from the insurance provider verifies the claim.
  • Depending on the outcome of the verification, the insurer may approve or refuse the claim.
What can be the maximum claim in WC policy?
The maximum claim amount under a workmen's compensation policy in India can vary depending on the terms and conditions of the insurance policy and the specific provisions of the insurance company. The compensation limit for workmen's compensation in India is determined by the Employees' Compensation Act, which sets the maximum amounts for different types of injuries and disabilities
Is workmen's policy compulsory?
The Workmen Compensation Act of 1923 mandates employers in India to pay compensation to their employees who work under hazardous situations. Schedule II of this Act makes Workmen's Compensation Insurance mandatory for employers of plantations, mines, factories, mechanically propelled vehicles, construction works, and other unsafe occupations to protect the occupational rights of their workmen. These provisions of the Act are also extended to those who deal with Liquefied Petroleum Gas (LPG) and other such mechanical devices (for example, chefs in restaurants and hotels).