Workmen’s Compensation Insurance: Coverage, Claim & Exclusions

Updated: 27-06-2022 16:47:43 PM

Employees form the backbone of any organisation, be it a small scale, medium or large enterprise. If your employees don’t feel safe and satisfied, your business will not reach the heights you’ve set in your mind. Thus, it is wise to invest in something that’ll safeguard the interest of your workforce. This can be done by purchasing workmen’s compensation insurance.

What is Workmen’s Compensation Insurance?

In India, every organisation is committed to providing a safe and healthy working environment to its employees. In case of an unfortunate event like accidents or death of any employee during the course of employment, the company is liable to pay the compensation. Workmen’s compensation insurance safeguards the organisation against this liability.

What all Workmen’s Compensation Insurance Covers?

This insurance policy covers the employers from various liabilities, such as:

• Medical expenses
• Occupational diseases
• Legal expenses incurred by the company, if a case is raised by the employee or the family members due to the injury or death of the employee
• Physical injury caused by accident to the employees during the course of employment
• Death or disability of the employee during the course of employment

Read More: What is Commercial Insurance – Coverage, Claim & Exclusions

How Workmen’s Compensation Insurance Functions?

Application and settlement of the workmen’s compensation insurance is a quick and easy process. Let us understand how the plan works.

• Understand your needs for this policy properly – the sum insured, number of employees to be covered, etc.
• Once you’re sure of the layout, find a provider which best suits your requirements. For this, you may use the various premium calculators available online
• Once finalised, get yourself enrolled in this insurance policy
• Whenever the need arises for a claim, the issue needs to be informed to the provider as soon as possible
• This intimation encompasses sending the claim form (filled and signed) along with all the required documents to support the claim
• After proper verification of the claim, the insurance company shall compensate the employer within the stipulated time

Eligibility Criteria

This insurance plan can be taken by employer who has an employer-employee relationship with their workforce.

Workmen’s Compensation Insurance Claim Process

The following steps are to be followed to settle the claim:

• The insured must notify the insurance company immediately after the incident occurs
• If the accident takes place at the manufacturing unit then the factory inspector must be intimated immediately about the incident
• The claim then needs to be submitted in writing with all the required documents
• The claim is verified by a representative from the insurance company
• The insurer may either approve or deny the claim depending on the verification result

Documents Required for Claim Process

For quick and easy approval of the workmen’s compensation insurance, following documents must be submitted:

• Duly filled in claim form
• Medical bills, in case of injury
• Statement provided by the injured
• Compensation records for previous claims
• Death certificate, in case of employee’s death
• Post-mortem report, in case of employee’s death
• Medical certificate, in case of permanent disability
• Memorandum of agreement according to the Employees’ Compensation Act, 1923

Cases Where you Can’t Claim Workmen’s Compensation Insurance (Exclusions)

• Accident(s) occurred at place other than the place of employment
• 3 initial days of disablement
• If the disablement is lesser than 28 days
• Injury caused due to the internal removal of the security device
• Injury caused to the employee by foreign attacks, wars, invasion or mutiny
• Occupational diseases contracted by the employee
• Interest or penalty imposed on the employee due to legal issues
• Health issues or accident caused when the employee was under the influence of alcohol and drugs
• Accident or death caused due to self- injury or deliberate aggravation of an accidental injury

How Long Does it Take to Pay Out a Claim?

Ideally the claim is settled within 30 days of submitting the workmen’s compensation insurance claim. If there is any arbitration involved, then it might take some more time to settle the claim.

Companies Offering Workmen’s Compensation Insurance in India

To help businesses and offices carry on with a focused mind without being pulled back by certain untoward incidents, many companies in India are now providing workmen’s compensation insurance. Some of them are:

• HDFC Ergo
• Future Generali
• United India Insurance Company
• Bharti AXA
• Tata AIG
• IFFCO Tokio

Important Aspects

Before going ahead with buying a workmen’s compensation insurance, it is important to understand how it works and its related aspects in order to get the best deal.

• The policy shall be considered void in case of any misrepresentation of non-disclosure of information in the proposal by the policy holder
• Every intimation or communication with the insurance company should be written and documented
• In case the policy holder does not take necessary preventative action to stop accidents and diseases, the claim might be rejected by the insurer
• As and when there is an increase in the employee count, the same must be informed to the insurance company
• If the labour and material both are included in the contract, the coverage is 75% of the contract amount

Advantages of Buying Workmen’s Compensation Insurance

• It helps companies adhere to the Employees’ Compensation Act, 1923 by safeguarding the safety of their employees
• Reduces the costs and expenses involved with the disability of the employees
• Compensates for the expenses incurred for the medical treatment of the injured

FAQs

Q1. How is  the premium for workmen’s compensation insurance calculated?

The premium is based on the occupation of the employees, number of employees insured and their cumulative wage.

Q2. How is the sum insured calculated?

The sum insured is calculated on the basis of earnings which include wages, salaries, overtime, boarding and lodging, to name a few.

Q3. Who can cancel the workmen’s compensation insurance?

Both the insurer and the insured can cancel the policy with a 15-day notice.

Q4. Who is responsible for providing compensation to the affected employee?

The employer must provide the compensation to the employee within 30 days of making the claim.

Q5. What is the deductible under workmen’s compensation insurance?

This is the amount which the employee is supposed to bear. If the claim amount exceeds the deductible, then only the insurer is liable to pay the claim.