Indemnity in Workers Compensation Insurance

The Workmen Compensation Policy was made to protect employees and their dependant family members from financial hardships. In case any employee suffers from a work-related injury, disease or death, then their source of income gets affected. But not when workers' compensation protects them. Under this insurance, they can file a claim and get compensation for their loss. The claims made when an employee is injured or deceased are called a claim of indemnity.

Also Read: Workmen Compensation Policy

In Case of Physical Injuries

The very first case when workers' compensation indemnity is paid is when an employee suffers physical injury, rendering them unable to work for some time. The workers compensation pays for the lost wages/salary for the number of days they are in recovery and cannot work. The compensation paid ensures that employees are financially secure while they are recovering.

In Case of Permanent Disability

If an employee suffers permanent disability due to work-related injuries, they are eligible for a lump sum under this indemnity insurance. However, the benefits provided are as per the limits specified in the Workmen Compensation Act. The reason behind lump sum compensation is that the cost of human life cannot be estimated. Thus, the principle of indemnity cannot be applied in case of permanent disablement. Hence, employees are paid a lump sum amount for their care after their employment.

Also Read: Worker’s Compensation for Injured Workers

In Case of Death

Similar to the permanent disability cases, the principle of indemnity cannot be applied in the event of an employee’s death. Thus, a sum insured amount is paid under the Workmen Compensation Policy to the deceased employee’s family member(s). The sum insured is based on the employee’s wages and the compensation amount paid to the employee’s family is adequate. It helps them to live in financially stable conditions even in the absence of a sole breadwinner.

In Case of Medical Claims

The worker's compensation indemnity provides coverage for medical expenses in the event of an employee’s injury. Hospitalisation and medical bills are indemnity claims. The policy would pay the actual medical costs incurred in treating injured employees.

In Case of Lawsuit

The workmen's compensation policy can also cover legal defence costs after getting consent from the insured company. The principle of indemnity applies in this case, and the policy reimburses the costs incurred in defending the organisation legally.

Also Read: Workmen Compensation Claim Settlement Process

Indemnity workers' compensation is every employee’s right to just compensation in the event of work-related injuries, disablement or death. As employers, businesses can ensure a safer work environment with a workmen's compensation policy. It is not only ethically correct but legally mandatory.

One of the benefits of getting a workmen’s compensation policy online is a seamless buying process with extensive and adaptable coverage options and an efficient claim process.

TATA AIG offers several types of SME insurance policies for businesses looking to secure their employees. These plans ultimately enhance an organisation’s image and give employees peace of mind.

What is the role of indemnity in insurance?

Indemnity insurance is designed to protect the financial and overall interests of professionals and business owners in case of any work-related injuries or accidents.

What is the compensation of indemnity?

Compensation of indemnity is the amount paid by one party (employer) to another party (employee) to cover losses incurred by the latter party fully. The intention is to restore the financial condition of the party suffered before the incident to a certain extent.

Is indemnity the same as lost time?

Yes, indemnity means the lost time an employee who suffered work-related injuries could have used to earn their livelihood. In other words, indemnity benefits are paid for the recovery time an employee takes due to a work-related injury.

Is it compulsory for employers to pay indemnity benefits to employees?

Yes, under the Workmen's Compensation Act, employers are required to provide necessary indemnity benefits to employees who suffer work-related injuries, diseases, disablements or deaths.