Know All About the Workmen Compensation Insurance Policy

workmen compensation insurance

 

 

 

 

 

 

 

 

 

 

The article talks about the benefits of workmen compensation insurance and why every employer should buy it. 

As an employer, it is your prime responsibility to provide safe working conditions to your employees. Unfortunately, many times accidents do happen within the safe atmosphere. According to the report of the British Safety Council, about 48,000 workers die in India due to occupational accidents. Every day, 38 fatal accidents take place in the construction sector.

While, these accidents not only cause physical injury, they are also followed by financial losses which an employer has to bear. In case, an employee suffers a bodily injury or dies during employment; the employer becomes legally responsible for paying the compensation.

Here, a workmen compensation insurance policy can protect the interests of employers. This insurance plan covers statutory liability of the employer against death or injury caused to the employees. This insurance policy offers compensation to the injured workers or their dependents in case of an industrial accident. It also covers occupation ailments, which arise out of work and results in death or disability.

A workmen’s compensation insurance policy meets the statutory requirement of the Workmen Compensation Act. As per this act, the contractor or main employer has to pay compensation to the employees in case of a mishap at the workplace. This Act is also called ‘The Employees Compensation (Amendment) Bill.

A workmen’s compensation insurance policy offers legal liability coverage by defending employers from costly lawsuits which may be filed against them by injured employees or their families.

Let’s Trace The History Of Workmen Compensation Insurance Policy

The workmen compensation insurance policy came into existence as the result of the grand bargain between the business owners and employees. Business owners got tired after being sued and paid hefty compensation to the injured employees. The insurance policy came into existence to address both the parties, i.e., employees and employers.

Thanks to this insurance policy, the employers get legal liability coverage and thus, they do not need to pay compensation from their pockets. Through this policy, the employer gives compensation to employees for disability and death during the course of employment.

What Is Covered Under Workmen Compensation Insurance Policy?

Though, the benefits covered under workmen compensation insurance differ from one policy to another, here are some of the benefits offered by most of the policy:

  • Death
  • Temporary disability
  • Permanent partial disability
  • Legal expenses, incurred if any

By paying extra, an employer can also cover medical expenses under the policy.

Who Is a ‘Worker’ Under Workmen Compensation Act?

As per the act, a worker is any person:

Who is railway servant according to the Railways Act, 1989 (24 of 1989)] and is not permanently employed in administrative, district or sub-divisional office of a railway and also not working in any capacity as mentioned under the Schedule II, or

  • a master, seaman or another member of the ship crew,
  • a captain or other member of the aircraft crew,
  • a person working as a driver, mechanic, helper, cleaner or in any other position who is in connection with a vehicle,
  • a person employed to work overseas by a company in any such capacity as mentioned in the Schedule II, or
  • Employed in any such capacity as mentioned in Schedule II. However, it doesn’t include any person who is working in the capacity of a member of the Armed Forces of the Union.

 

How Is the Compensation Determined?

Under the workmen compensation insurance policy, the compensation to be paid by employers is computed on the basis of the extent of injuries suffered by employees. The more severe the injuries are, the more will be the compensation. Further, the age also plays a crucial role. The higher the age, lower will be the remaining working years, and hence, lower will be the compensation given.

Also, wages are considered for computing the compensation amount. It means, two workers who are earning different wages can get different compensation on the basis of their earnings, even if they both have sustained the same injuries.

As per Workmen Compensation Act, the wages are the benefits which can be calculated on the basis of money. It doesn’t include provident fund, travel allowance or other benefits given by employers to workers.

In case, the monthly wages of a worker are less than the limit as mentioned under the Minimum Wages Act, 1948, then he/she would consider being getting the same wages as mentioned under the Act, for computing the compensation.

In case of worker contracts any occupation ailment, the compensation would be calculated on the basis of the wages drawn at the time of termination from the employment and not at the time of diagnosing the disease. In case of death of the worker, his/her dependent will get the compensation.

What is Not Covered Under the Workmen Compensation Act  

Though, workmen compensation insurance policy offers comprehensive coverage, here are some of the events which are not covered:

  1. Injury or accident which is directly linked to war invasions and other perils
  2. Injury or accident happens under the influence of alcohol or drugs
  3. Injury/death occurs due to violation of safety rules
  4. Injury or accident doesn’t result in fatal or partial disability for over three days

Note, it is not an exhaustive list of exclusions, and therefore, read the policy document carefully to have a better idea.

Conclusion

Every business unit should go with a workmen compensation insurance to safeguard itself from legal liability. The workplace injury can prove costly in terms of money and by buying the workplace insurance policy, an employer can secure its resources.

Further, the policy also favours employees who do not need to pursue employers in the court as the compensation will be available to them through the policy.

Overall buying workmen compensation insurance is a win-win situation for both the employer and employees.

 

 

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