Key Factors for Choosing Workmen's Compensation Policy
- Author :
- TATA AIG Team
- ●
- Last Updated On :
- 04/10/2024
- ●
- 2 min read
Managing the risk of injuries and optimising operational efficiency in a workplace is key to a successful and sustainable manufacturing business. As employees make the foundation of any business venture, it is important to ensure that the work environment is safe and there is security against unforeseeable events.
These factors falls under the purview of the Workmen's Compensation Act of 1923, which requires businesses to offer insurance benefits to their employees.
However, before buying a Workmen's Compensation policy online, it is important to understand the key features of workmen's compensation insurance.
What is Workmen’s Compensation?
Employee/workmen's compensation is a legal obligation for employers mandated by the government. It is a specialised insurance policy that is designed to offer financial protection to both employees and employers in the event of work-related injuries or illnesses.
This policy's primary purpose is to ensure that employees receive adequate compensation for medical expenses, lost wages, and the cost of rehabilitation. In turn, employers are also protected from potential legal consequences associated with workplace mishaps.
Under the Workmen's Compensation Act of 1923, all employees working full-time, part-time, temporarily, or casually are eligible for financial protection. The law comes into effect in the event that an employee sustains injuries or dies at the workplace.
Industries Eligible for Coverage Under the Workmen's Compensation Act, 1923
Here are the industries that are eligible for protection for front-line workers under the Workmen's Compensation Act 1923:
Temporary workers in the railway sector not affiliated with administrative, district, or sub-divisional offices
Pilots and flight staff belonging to an airline crew
Workers hired in foreign countries according to Schedule II of the Workmen's Compensation Act 1923
Construction sites, mines, docks, factories, and designated locations that employ labourers as per the Employee Compensation Act, Schedule II
Drivers, mechanics, assistants, and any other personnel involved in vehicle-related work
Types of Workmen's Compensation Policy
Before exploring the features of the Workmen's Compensation Act 1923, let’s take a look at the different types of Employee Compensation policies available. In essence, there are two kinds of WC policies offered by insurance companies for businesses. They are:
Named: Under this coverage, the names of the employees engaged are explicitly mentioned in the policy documents
Unnamed: Under this policy, it is not mandatory to specify the names of the labourers or employees who are covered under the insurance.
Salient Features of the Workmen's Compensation Act
Before investing in the policy, it is important to be acquainted with the key features of the Workmen's Compensation Act. Businesses are under a legal obligation to offer financial compensation based on the Workmen's Compensation Act 1923 in the following scenarios:
An employee sustains an injury owing to an accident at the workplace
If there is evidence that the accident or injury has happened in the workplace and has an adverse effect on the employee’s physical condition
In the event of the employee’s untimely demise at the workplace or if they have sustained total or permanent partial disability
As per the features of the Workmen's Compensation Act 1923 section 4, the compensation that the employees are eligible to receive are as follows
Type of Disability Compensation Temporary Disability Up to 25% of the employee’s monthly earnings Permanent Total Disability 60% of the monthly salary or ₹1,40,000, whichever is higher Permanent Partial Disability Percentage of earnings loss specified in Schedule I, Part II Death 50% of monthly earnings or ₹1,20,000, whichever is higher
Important Factors to Choose on the Workmen's Compensation
When investing in a workmen's compensation policy, it is important to consider the following factors:
Legal Compliance
Whether you are buying a workmen's compensation policy online or offline it is important to ensure that the policy is in adherence with the legal obligations of your jurisdiction.
Every state or country has its own rules and regulations with regard to employee compensation policy.
This includes coverage limits, mandatory coverage for specific industries, and reporting requirements. It is imperative to understand and follow these rules to avoid legal actions and fines.
Work Environment
It is important to consider the specificities of the work environment in which your business functions. Certain work environments, such as manufacturing or construction, have a higher probability of accidents and injuries than sedentary work environments.
Specialised coverage may be needed for certain hazardous work environments. For instance, if a workplace involves working at a height or with dangerous material, employers may need to get add-on coverage on a basic policy.
Benefits and Scope of the Coverage
Make note of the policy inclusions and benefits and ensure that it covers potential workplace hazards and accidents. The policy must offer adequate coverage to compensate employees in the case of illnesses and injuries. To calculate coverage limits, consider the market wages and potential healthcare costs.
Policy Exclusions
One of the most important and often neglected features of workmen's compensation insurance is analysing the limitations of the policy. Some policies may not offer coverage against certain types of illnesses or injuries, such as pre-existing health conditions or self-inflicted wounds.
Others may have limitations on coverage for specific activities. Make a note of these limitations and, if necessary, get the appropriate add-on covers to appropriately secure your business and your employees.
Insurance Company
When investing in a workmen's compensation policy, it is important to find a reliable and financially stable insurance company like Tata AIG.
It is also important to make an informed decision and research the company's reputation, reviews of former customers, ease of claim settlement process, high claim settlement ratio, etc.
Businesses can even consider consulting with insurance specialists and brokers who specialise in employee compensation insurance to help choose the right insurance provider.
Premium Payable
One of the biggest benefits of buying a workmen's compensation policy online is that insurance seekers can easily compare the policies offered by different providers and make the right decision. While cost is an important factor, it should not be the sole factor in choosing the right policy.
Risk Management Assistance
Some insurance companies offer additional benefits such as risk management support that can aid businesses in identifying and avoiding potential threats, arranging safety training for employees, and curating necessary protocols to mitigate accidental injuries.
Make a note of whether a policy includes such risk management support and analyse its value for your enterprise and the employees.
In addition to providing coverage against accidents and injuries in the workplace, the right workmen's compensation policy will also prevent such eventualities from happening.
This can happen with appropriate safety training, providing access to safety materials, and having the right ongoing support and consultation services.
Wrapping Up
As per the government guidelines, it is mandatory for businesses to offer insurance support to their employees under the Workmen's Compensation Act 1923.
However, before investing in employee insurance, it is important for employers to acquaint themselves with the features of the Workmen's Compensation Act so they can choose the right policy for their business and their employees.
Small and medium-sized businesses can also invest in SME insurance policy offered by Tata AIG to secure their workforce and their business against unfortunate eventualities.
FAQS
What documents are needed to raise a claim against Workmen’s Compensation Insurance?
Some of the key documents that the employee needs to submit include:
Duly filled out and signed claims form
Medical bills and
Compensation records
In addition to the aforementioned, if the workplace accident has led to disabilities or death, the employee will have to submit the relevant proof in the form of medical certificates.
Who is eligible to receive the compensation in the event of the employee’s demise?
According to the Workmen's Compensation Act of 1923, in the event of an employee’s untimely demise at the workplace, financial compensation is offered to their dependents.
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.
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