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Workmen's Compensation Insurance

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What is Employee’s Compensation Insurance?

Every company must ensure a safe workplace, but accidents can still happen. Injuries or, in severe cases, death during employment require compensation under laws like the Employee’s Compensation Act 1923 (previously called as the Workmen’s Compensation Act, 1923).

Not compensating can lead to legal issues, affecting employee confidence and the business's reputation. Employee’s compensation insurance (commonly known as WC policy or WC insurance) helps financially, covering compensation and legal costs. It also protects against lawsuits, as employees usually give up the right to sue for workplace negligence when accepting benefits. Previously known as Workmen Compensation Insurance, it ensures both businesses and employees are financially protected.

Employee’s Compensation Insurance helps you financially safeguard your employees and their families against unfortunate workplace accidents and mishaps. Most importantly, it presents you as a thoughtful and caring employer who values his workforce, an asset for any organization.

What is the Employee’s Compensation Act?

The Employee’s Compensation Act, 1923 prescribes about financial compensation to employees if they encounter an accident during the course of employment while doing/discharging their duties. Under this law, all full-time, part-time or casual employees are liable to receive financial protection. The Act's provisions kick in when employees suffer injuries that render them incapable to perform their duties or they succumb to their injury.

Why do you need an Employee’s Compensation Insurance Policy?

Having Employee’s Compensation Policy (previously known as Workmen Compensation Policy) is crucial for these reasons:

  • It supports employees financially for work-related injuries, covering medical expenses
  • Prioritizing employee safety enhances your brand image, positively impacting customer and investor perceptions.
  • Compliance with contracts requiring employee’s (workmen's) compensation ensures legal obligations, preventing disputes.
  • Mitigating financial risks, it acts as a safety net, fostering a win-win situation for productivity and revenues.
  • It provides peace of mind, fulfilling legal duties for employers and offering financial security for employees in case of job-related injuries.

What is Covered under Employee’s Compensation Insurance?

The policy covers legal liability of an employer under:

  • 1. Workmen Compensation Act, 1923 [as amended through Employee’s Compensation (Amendment) Act, 2017], and subsequent amendments of the said Act prior to the date of issue of the policy.
  • 2. Common law, only up to the limit of indemnity agreed under the respective policy
  • 3. Fatal Accident Act 1955

Employee’s Compensation Policy provides coverage for:

  • Accidental death, Permanent total or Partial Disability and Temporary total disability suffered at the workplace during working hours

Additionally, add-on covers provided under Employee’s Compensation Insurance (previously: Workmen Compensation Policy) covers:

  • Occupational diseases specified under Schedule III of the Employee’s Compensation Act, such as diseases caused by the use of toxic compounds.
  • Contractor and subcontractors and their employees
  • Expenses incurred on medical surgeries in case of hospitalization for more than 24 hours.

Coverage under Employee’s Compensation Insurance (formerly known as Workmen Compensation Insurance) is provided if, at the time of the accident, the worker is engaged in the employer’s business and not doing something for personal benefit. Employee and employer relationship is one of the prerequisites for the policy’s benefits to kick in.