InsuranceLiya.com

workmen insurance

What is Workmen Compensation Insurance? (Meaning, Examples & more)

Employers in India are mandated under the Fatal Accident Act 1855, and Workmen’s Compensation Act 1923 to provide financial coverage to their employees in the event that their workers get maimed or killed during working on site.

Such a policy generally covers workmen in industries like mining, construction, ship building, plantations, sewage disposal, radioactive jobs, etc. The compensation provided under this scheme covers the cost of hospitalization, rehabilitation, diagnosis, etc. Further, if the worker dies, the family is compensated for their loss.

Topics covered:

  • Importance and benefits of Workmen Compensation Insurance
  • The extent of coverage provided
  • Add-ons
  • Example
  • Inclusions and exclusions of Workmen Compensation Insurance

Importance and benefits of Workmen Compensation Insurance

Let us elucidate some of the most important benefits of Workmen Compensation Insurance:

  • The worker is provided insurance coverage that will act as a protective cushion in the event of an unfortunate work accident.
  • In the event of death, the insured worker’s family will get compensated for the loss of their loved one.
  • Workmen insurance policies can be customizable as per the requirements of the employer and the nature of the employee’s job. This provides great flexibility.
  • It is mandated that businesses having more than 20 employees have a Workmen Compensation Insurance policy in place, as per The Employees’ State Insurance Act, 1948.

The extent of coverage provided

Let us now understand the extent of coverage and protection provided to the employees in different scenarios.

Type of claim

Compensation provided

Death due to accident

Rs.1,20,000 or 50% * age * wages (Whichever is higher)

Temporary disability

25%* number of days of absenteeism/disability * wages / 15

Permanent disability (Total)

Rs.1,20,000 or 60% * age * wages (whichever is the higher amount)

Permanent disability (Partial)

Loss of the workers earning capacity ascertained by a registered doctor / % extent of disability * wage / 15

Add-ons

  • Acts of terror add-on
  • Sub-contractors add-on
  • Terrorism coverage
  • Cashless add-on
  • Compressed air diseases add-on

Example

Let us understand how Workmen Compensation Insurance works with the help of a real world example.
Let us assume that Mr. Sashikant, a workman, working in a car factory met with an unfortunate accident while assembling a car and died.

As he was covered under Workmen Compensation Insurance, Mr. Sashikant’s family was compensated to the tune of Rs.40 Lakhs. His family used this money to fund the education of Mr. Sashikant’s daughter, and the rest of the funds were utilized for running the daily chores of the house.

Inclusions and exclusions of Workmen Compensation Insurance

Inclusions

Exclusions

Injuries caused while working

Employees not considered workmen

Diseases caused while working

Death caused due to being under the influence of alcohol

Death

Disability caused due to being under the influence of alcohol

Partial and total disability

Intentionally flouting the safety norms laid down by the employer

Accidents

Death or disability caused due to being under the influence of illicit drugs.

Temporary disability

Accidents of non-workers

Occupational illness

Diseases under Section ‘C’ of The Workmen’s Compensation Act

Health care coverage

 

Are you looking for a new insurance policy or a policy renewal? Reach out to us and let us assist you.

Enter your details

Frequently asked questions about Workmen Compensation Insurance

  • Who bears the cost of the Workmen's Insurance?

    The cost of insurance is borne by the employer.

  • Is Workmen's Compensation Insurance mandatory?

    It is mandatory for employers employing more than 20 workmen in their business.

  • How do I file a workmen's compensation insurance claim?
    1. Inform the insurance company
    2. Provide all necessary documents and identification
    3. Explain the nature of the claim
    4. Follow-up for claim redressal.