Workmen/Employee Compensation Insurance
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Workmen Compensation
Employees are undeniably the backbone of any organisation, contributing significantly to its success. Consequently, it is crucial for employers to ensure that their workforce receives adequate financial compensation in case of workplace accidents. To address this need, various laws were enacted, such as the 1884 Compensation Act and the Fatal Accidents Act of 1885.
However, these early laws were insufficient in providing comprehensive financial support to injured workers. Recognising this gap, the Indian Parliament passed the Workmen’s Compensation Act in 1923.
This landmark legislation was designed to offer better financial protection to workers who suffer injuries while performing their duties.
Keep reading to discover how the workers compensation law benefits employees.
What is Workers’ Compensation?
Workers' compensation is a type of insurance that provides financial compensation and optional medical care to employees who get injured due to any accident in the course of their employment. The benefits of workers' compensation include partial wage replacement for the period during which the employee cannot work.
This means that if an employee is unable to perform their job due to a workplace injury, they will still receive a portion of their regular wages.
In addition to wage replacement, workmen’s compensation benefits may also cover the cost of medical treatments on an optional basis, including healthcare services and occupational therapy needed for recovery. This ensures that employees do not have to bear the financial burden of medical expenses resulting from workplace accidents.
Most workers' compensation programs are funded by private insurers, with premiums paid by individual employers.
What is the Workmen’s Compensation Act?
The Workmen’s Compensation Act 1923, enacted by the Indian Parliament in 1923, is a landmark
legislation aimed at providing financial protection to workers who suffer injuries or illnesses due to their
jobs.
The Act mandates that employers offer compensation to workers who sustain injuries, disabilities or
diseases directly related to their employment. This compensation covers medical expenses and loss of
wages during recovery and provides financial support to workers' dependents in case of fatal accidents
Updates in the Workmen Compensation Act 1923
Since its inception in 1923, the Workmen’s Compensation Act has undergone significant updates to better serve employees. These updates aim to improve the protection and benefits provided to employees, ensuring they receive fair and adequate compensation for their contributions and risks in the workplace.
The two major changes are:
Name Change in 2010
In 2010, the law's name was changed from the Workmen’s Compensation Act to the Employee’s Compensation Act. This change was made to reflect a more inclusive and modern approach, recognising all employees rather than just workmen.
Increase in Compensation Amount in 2020
On 3rd January 2020, the Ministry of Labour and Employment made a significant update to the Act. The amount on which compensation is calculated was raised from ₹8,000 to ₹15,000.
This means that the basis for calculating compensation amounts has nearly doubled, ensuring better financial support for employees and their families in case of workplace injuries or fatalities.
Workers' Compensation special considerations
When dealing with workers' compensation, there are several important aspects to consider:
Disputed claims
Employers may dispute a workers’ compensation claim. If this happens, the Workers’ Compensation Board is responsible for resolving the dispute. Common disputes involve questions about whether the employer is actually liable for the injury or illness.
Insurance fraud
Workers’ compensation payments can be vulnerable to fraud. This can occur when an employee falsely claims that an injury occurred on the job, exaggerates the severity of an injury or completely invents an injury.
Independent contractor exception
Only regular employees are generally eligible for workers’ compensation; independent contractors are not. This exclusion is significant as the gig economy, or short-term employment, continues to expand rapidly.
With a growing number of people working as independent contractors, either full-time or part-time, there is an increasing need for clear guidelines and potentially expanded protections for these workers.
This ongoing issue underscores the importance of addressing the rights and benefits of contract workers in the evolving employment landscape.
Why do you need a Workmen’s Compensation Insurance policy?
Having a workmen's compensation policy is essential for several key reasons:
Financial support for employees
It provides crucial financial assistance to employees who suffer work-related injuries. This includes covering medical expenses on an optional basis, rehabilitation costs and a portion of lost wages during recovery. Ensuring that employees are taken care of helps maintain their well-being and fosters a positive work environment.
Enhanced brand image
Prioritising employee safety and well-being enhances your company’s reputation. Customers and investors are more likely to support businesses that demonstrate a commitment to protecting their workforce. This positive image can lead to increased loyalty and better business opportunities.
Legal compliance
Many contracts and business agreements require employers to have workmen compensation insurance. By maintaining this coverage, you ensure compliance with legal and contractual obligations, which helps prevent potential disputes and legal issues.
Risk mitigation
Workmen’s compensation insurance mitigates financial risks for employers by providing a safety net in the event of workplace injuries. This protection helps avoid significant financial losses that could impact the company’s productivity and revenue. By fostering a secure environment, both employers and employees benefit.
Peace of mind
Having a workmen’s compensation policy provides peace of mind for employers, knowing they are fulfilling their legal duties. For employees, it offers financial security and reassurance that they will be supported in case of job-related injuries. This mutual assurance strengthens the overall stability and morale of the workplace.
Benefits of Workmen’s Compensation Insurance Policy
A few important workmen's compensation benefits are as follows:
Extensive and adaptable coverage
Tata AIG’s workmen's compensation policy offers broad coverage, including medical expenses on an optional basis for workplace injuries. This comprehensive protection benefits employees and shields employers from potential legal liabilities.
Efficient claims settlement process
Our dedicated team ensures prompt handling and review of claims. We collaborate with you for quick processing and transparent communication, minimising disruptions to your business operations.
Customised coverage for diverse business needs
At Tata AIG, we understand that every business is unique and faces different risks. Our workmen’s compensation policy is tailored to meet each business's specific requirements, providing adequate protection for all workplace environments.
Seamless purchase experience
Buying our workmen's compensation policy is easy and efficient. With just a few clicks, you can secure coverage, protecting your business and employees seamlessly from anywhere, whether you are at home or in the office.
What does Workers Compensation Insurance cover - Workmen's Compensation Inclusions
If you do not have an idea about what workers comp cover, you need to understand the inclusions before buying a policy.
The workers comp insurance coverage offers the following inclusions:
Bodily injuries sustained due to accidents occurring during the course of employment.
Bodily injuries resulting from diseases or conditions aggravated by the employment.
Temporary disability or death.
Partial or total permanent disability.
Legal expenses incurred with the company's consent.
What is not covered in Workmen’s Compensation Insurance policy?
The workers comp policies do not cover the following situations:
- Injuries caused by events such as war, invasion, acts of foreign enemies, hostilities (whether war is declared or not), civil war, mutiny, insurrection, rebellion, revolution, military or usurped power, nuclear weapons, ionising radiation, or contamination from nuclear fuel or waste.
- Accidents that occur outside the specified place(s) of employment unless the employee was there on duty for the business and under the direction of the insured or an authorised official.
- Occupational diseases contracted by an employee.
- Medical expenses for treating any injury sustained by an employee.
- Interest and/or penalties imposed on the insured under any law or otherwise.
- Injuries to persons employed by a contractor or sub-contractor of the insured, unless specifically covered in the policy schedule.
- Injuries sustained by a person who is not declared for insurance under this policy or employed outside the insured's business.
- Any amount that the insured could have recovered from another party if not for an agreement between the insured and that party.
- Liabilities assumed by the agreement that would not be attached in the absence of such agreement.
- Incapacity or death resulting from the employee’s deliberate self-injury or intentional aggravation of an accidental injury.
- Injuries or accidents resulting from the influence of drugs or alcohol.
Types of Workers’ Compensation
There are different types of workers compensation policies available which are designed to cover different types of disabilities that employees might face due to workplace injuries.
Here are the main types of workers compensation insurance:
Temporary total disability
This covers employees who are completely unable to work for a temporary period due to a work-related injury or illness. Once they recover, they can return to their regular duties.
Temporary partial disability
This coverage provides benefits to employees who can still work but only in a limited capacity and at reduced wages. It helps bridge the gap in income until they fully recover.
Permanent total disability
This covers employees who suffer injuries or illnesses that prevent them from ever returning to work in any capacity. These benefits are designed to provide long-term financial support.
Permanent partial disability
This applies to employees who experience a permanent injury that partially impairs their ability to work. This type of policy provides compensation based on the extent of the disability and its impact on the employee's ability to earn a living.
How to Buy Employee Compensation Insurance Policy from Tata AIG?
Purchasing a workmen’s compensation insurance policy from Tata AIG is simple and straightforward.
Here is how you can buy workers comp insurance online:
Select Industry Category
Choose your industry category and fill in the details about your workers.
Provide Additional Information
Enter other necessary details, such as your mobile number, email ID, company name and Pincode.
Proceed to Buy
Click on ‘Proceed to Buy’ and follow the instructions on the subsequent page to complete your purchase.
What is the claiming process for Workmen’s Compensation Insurance?
To claim workers compensation insurance policy with Tata AIG, follow these steps:
Notify the insurance company
Send a written notice to Tata AIG about the accident and the worker's resulting disablement or death.
Verification
An investigating officer from Tata AIG will verify the authenticity of the claim.
Gather Documentation
Collect all necessary information and documentary evidence related to the accident and the injury.
Submit Claim Form
Submit the completed claim form along with the gathered documents. Ensure you include the policy number, name of the insured, name of the injured worker, date of the accident, nature of the claim and a brief description of the accident.
Documents Required for Buying Employee Compensation Policy
Ensure you have the following workers compensation documents ready when purchasing a workmen's
compensation insurance policy:
Completed Proposal Form
A fully filled proposal form signed by the company's authorised signatory specifying the line of work.
Organisation’s KYC Documents
Certification of incorporation
PAN (Permanent Account Number)
DIN (Director Identification Number)
Copy of business commencement certificate
Copy of ITR (Income Tax Returns)
Employee Records
Detailed records of the number of workers and their job profiles.
Salary Information
Documentation of workers' salaries.
Additional Documents
Any other documents as required by the insurance company.
Workmen's Compensation Eligibility: Who can buy a Workmen’s Compensation Policy online
If you are thinking about how to qualify for workers comp, understand this:
Employers (Principal or Contractor)
Any employer, whether acting as a principal or contractor, who hires "employees" as defined under the Employee’s Compensation Act, 1923.
Employers with equivalent relationships
Any employer whose workers may not technically qualify as "employees" under the Act but who have a relationship with the employer similar to that of an employee-employer relationship due to the nature of their engagement.
How Much Does Workers’ Compensation Cost: Amount Payable Under This Policy?
Here are the cost of workers comp insurance policies:
Death Resulting from an Injury
Compensation equal to 50% of the deceased employee's monthly wages multiplied by a relevant factor or a minimum amount of ₹1.2 lakhs, whichever is higher.
Permanent total disablement from injury
Compensation equal to 60% of the injured employee's monthly wages multiplied by a relevant factor or a minimum amount of ₹1.4 lakhs, whichever is higher.
Permanent partial disablement resulting from injury
For injuries listed in Part II of Schedule I, compensation is based on the percentage of loss of earning capacity caused by the injury.
For injuries not specified in Schedule I, workers comp policy cost is proportionate to the loss of earning capacity as assessed by a qualified medical practitioner.
Temporary disablement (Total or Partial) resulting from injury
A half-monthly payment equal to 25% of the employee's monthly wages, paid in accordance with the provisions of sub-section (2) of the Workmen’s Compensation Act, 1923.
Workmen Compensation Insurance Policy: Add-Ons
Here are some add-ons that are available under the Workmen Compensation Policy:
Medical Extension
This add-on can be purchased by employers and is applicable when a worker is hospitalised for more than a day.
Sub-contractors Cover
If a contractor hires subcontractors who do not have a workmen compensation plan, the contractor can opt for this add-on to provide coverage for the subcontractors.
Terrorism Cover
This add-on provides coverage for losses or damages caused by terrorist attacks.
Conditions Regarding Workmen Compensation
Under the law, all employees—whether working full-time, part-time, temporarily or casually—are entitled to financial protection. This protection applies in cases of injuries, incapacity, disfigurement or death while performing their duties.
Here are some of the workers compensation policy conditions that you should be aware of:
Covered Employees
Front-line workers in the following industries are protected under this law:
Railway Employee: Non-permanent employees who do not fall under the sub-
divisional, district or administrative offices.Aviation Workers: Captains and crew members on an aircraft.
Labourers Employed Abroad: Those employed as per Schedule II of the
Workmen Compensation Act, 1923.Construction and Industrial Workers: Individuals working at construction
sites, mines, docks, factories and specific places listed in Schedule II of the Act.Automobile Workers: Drivers, mechanics, helpers and others associated with
vehicle operations.
Employer Requirements
According to this Act, any company or establishment operating in the sectors mentioned above and employing more than 10 employees must comply with its rules and provide the necessary protections.
How to Find Suitable Workmen Compensation Policy Online?
Finding a suitable workmen's compensation policy online involves a few simple steps:
Step 1
First, research and compare policies from different workers comp insurance companies to understand their coverage and benefits.
Step 2
Then, look for customer reviews and ratings to gauge reliability and choose the best workers comp insurance provider. Ensure the policy covers all necessary aspects, including medical expenses, disability benefits and legal liabilities. Consider any add-ons like medical extensions or subcontractor coverage if needed.
Step 3
Finally, check the ease of the claims process and customer support services. By following these steps, you can find a comprehensive policy from an affordable workers comp insurance provider that meets your business needs effectively.
Why Tata AIG General Insurance Company Limited?
Indian multinationals who have workmen's compensation needs in various countries around the world can opt for global policies from Tata AIG General Insurance Company Limited, which leverage AIG's presence in more than 130 countries. Tata AIG General Insurance Company Limited can arrange locally admitted and non-admitted policies as per the demands of the jurisdiction in which the multinational operates.
Workmen's Compensation Exclusions
- Injuries caused by events such as war, invasion, acts of foreign enemies, hostilities (whether war is declared or not), civil war, mutiny, insurrection, rebellion, revolution, military or usurped power, nuclear weapons, ionising radiation, or contamination from nuclear fuel or waste.
- Accidents that occur outside the specified place(s) of employment unless the employee was there on duty for the business and under the direction of the insured or an authorised official.
- Occupational diseases contracted by an employee.
- Medical expenses for treating any injury sustained by an employee.
- Interest and/or penalties imposed on the insured under any law or otherwise.
- Injuries to persons employed by a contractor or sub-contractor of the insured, unless specifically covered in the policy schedule.
- Injuries sustained by a person who is not declared for insurance under this policy or employed outside the insured's business.
- Any amount that the insured could have recovered from another party if not for an agreement between the insured and that party.
- Liabilities assumed by the agreement that would not be attached in the absence of such agreement.
- Incapacity or death resulting from the employee’s deliberate self-injury or intentional aggravation of an accidental injury.
- Injuries or accidents resulting from the influence of drugs or alcohol.
Frequently Asked Question
