Key Factors for Choosing Workmen's Compensation Policy

Employee/workmen's compensation is a legal obligation for employers mandated by the government. It is a specialised insurance policy that is designed to offer financial protection to both employees and employers in the event of work-related injuries or illnesses.

This policy's primary purpose is to ensure that employees receive adequate compensation for medical expenses, lost wages, and the cost of rehabilitation. In turn, employers are also protected from potential legal consequences associated with workplace mishaps.

Under the Workmen's Compensation Act of 1923, all employees working full-time, part-time, temporarily, or casually are eligible for financial protection. The law comes into effect in the event that an employee sustains injuries or dies at the workplace.

Industries Eligible for Coverage Under the Workmen's Compensation Act, 1923

Here are the industries that are eligible for protection for front-line workers under the Workmen's Compensation Act 1923:

• Temporary workers in the railway sector not affiliated with administrative, district, or sub-divisional offices

• Pilots and flight staff belonging to an airline crew

• Workers hired in foreign countries according to Schedule II of the Workmen's Compensation Act 1923

• Construction sites, mines, docks, factories, and designated locations that employ labourers as per the Employee Compensation Act, Schedule II

• Drivers, mechanics, assistants, and any other personnel involved in vehicle-related work

Before exploring the features of the Workmen's Compensation Act 1923, let’s take a look at the different types of Employee Compensation policies available. In essence, there are two kinds of WC policies offered by insurance companies for businesses. They are:

Named: Under this coverage, the names of the employees engaged are explicitly mentioned in the policy documents

Unnamed: Under this policy, it is not mandatory to specify the names of the labourers or employees who are covered under the insurance.

Before investing in the policy, it is important to be acquainted with the key features of the Workmen's Compensation Act. Businesses are under a legal obligation to offer financial compensation based on the Workmen's Compensation Act 1923 in the following scenarios:

An employee sustains an injury owing to an accident at the workplace

• If there is evidence that the accident or injury has happened in the workplace and has an adverse effect on the employee’s physical condition

• In the event of the employee’s untimely demise at the workplace or if they have sustained total or permanent partial disability

• As per the features of the Workmen's Compensation Act 1923 section 4, the compensation that the employees are eligible to receive are as follows

• Type of Disability	Compensation
  Temporary Disability	Up to 25% of the employee’s monthly earnings
  Permanent Total Disability	60% of the monthly salary or ₹1,40,000, whichever is higher
  Permanent Partial Disability	Percentage of earnings loss specified in Schedule I, Part II
  Death	50% of monthly earnings or ₹1,20,000, whichever is higher

When investing in a workmen's compensation policy, it is important to consider the following factors:

Legal Compliance

Whether you are buying a workmen's compensation policy online or offline it is important to ensure that the policy is in adherence with the legal obligations of your jurisdiction.

Every state or country has its own rules and regulations with regard to employee compensation policy.

This includes coverage limits, mandatory coverage for specific industries, and reporting requirements. It is imperative to understand and follow these rules to avoid legal actions and fines.

Work Environment

It is important to consider the specificities of the work environment in which your business functions. Certain work environments, such as manufacturing or construction, have a higher probability of accidents and injuries than sedentary work environments.

Specialised coverage may be needed for certain hazardous work environments. For instance, if a workplace involves working at a height or with dangerous material, employers may need to get add-on coverage on a basic policy.

Benefits and Scope of the Coverage

Make note of the policy inclusions and benefits and ensure that it covers potential workplace hazards and accidents. The policy must offer adequate coverage to compensate employees in the case of illnesses and injuries. To calculate coverage limits, consider the market wages and potential healthcare costs.

Policy Exclusions

One of the most important and often neglected features of workmen's compensation insurance is analysing the limitations of the policy. Some policies may not offer coverage against certain types of illnesses or injuries, such as pre-existing health conditions or self-inflicted wounds.

Others may have limitations on coverage for specific activities. Make a note of these limitations and, if necessary, get the appropriate add-on covers to appropriately secure your business and your employees.

Insurance Company

When investing in a workmen's compensation policy, it is important to find a reliable and financially stable insurance company like Tata AIG.

It is also important to make an informed decision and research the company's reputation, reviews of former customers, ease of claim settlement process, high claim settlement ratio, etc.

Businesses can even consider consulting with insurance specialists and brokers who specialise in employee compensation insurance to help choose the right insurance provider.

Premium Payable

One of the biggest benefits of buying a workmen's compensation policy online is that insurance seekers can easily compare the policies offered by different providers and make the right decision. While cost is an important factor, it should not be the sole factor in choosing the right policy.

Risk Management Assistance

Some insurance companies offer additional benefits such as risk management support that can aid businesses in identifying and avoiding potential threats, arranging safety training for employees, and curating necessary protocols to mitigate accidental injuries.

Make a note of whether a policy includes such risk management support and analyse its value for your enterprise and the employees.

In addition to providing coverage against accidents and injuries in the workplace, the right workmen's compensation policy will also prevent such eventualities from happening.

This can happen with appropriate safety training, providing access to safety materials, and having the right ongoing support and consultation services.

As per the government guidelines, it is mandatory for businesses to offer insurance support to their employees under the Workmen's Compensation Act 1923.

However, before investing in employee insurance, it is important for employers to acquaint themselves with the features of the Workmen's Compensation Act so they can choose the right policy for their business and their employees.

Small and medium-sized businesses can also invest in SME insurance policy offered by Tata AIG to secure their workforce and their business against unfortunate eventualities.

What documents are needed to raise a claim against Workmen’s Compensation Insurance?

Some of the key documents that the employee needs to submit include:

• Duly filled out and signed claims form

• Medical bills and

• Compensation records

In addition to the aforementioned, if the workplace accident has led to disabilities or death, the employee will have to submit the relevant proof in the form of medical certificates.

Who is eligible to receive the compensation in the event of the employee’s demise?

According to the Workmen's Compensation Act of 1923, in the event of an employee’s untimely demise at the workplace, financial compensation is offered to their dependents.