Labour Insurance Policy: Check Plans & Save up to 85%

Labour insurance policy, in simple terms, means insurance that provides a specific set of benefits to employees in the event of sustaining work-related injuries, accidents, disabilities or deaths. 

The employer typically provides insurance coverage to its employees with the aim of providing them with financial security and the overall well-being of the organisation's workforce. However, it must be noted that the specifics of labour insurance coverage and benefits provided vary based on regional laws and regulations. 

What is the Workmen Compensation Act 1923? 

Enacted by the Indian Parliament in 1923, the Workmen's Compensation Act of 1923 is historical legislation that aimed to provide financial assistance and security to employees who suffered illness, injury, disability or death due to their employment. 

The Act makes it mandatory for all employers/organisations to provide labour insurance policies to their employees. Under this insurance, they can claim compensation for injuries, illness, disability or death due to work or work environment. 

The insurance compensation provides for medical expenses and loss of wages during recovery and supports employees' dependents in the event of a fatal accident. 

Also Read: Benefits of Workmen Compensation Insurance

Provides Financial Support to Employees 

A labour insurance policy is essential for providing financial security to employees. It covers the expenses of work-related injuries, such as medical expenses, rehabilitation costs and a portion of lost wages due to injury or disability. It eventually helps ensure employees' well-being in difficult times and ultimately fosters a positive workplace environment. 

Legal Compliance 

Businesses must have a labour insurance policy to comply with legal requirements. Labour insurance helps ensure compliance with employers' legal and contractual obligations toward their employees, allowing employers to avoid legal penalties and fines for non-compliance. 

Improves Brand Image

Public opinion towards any business or organisation plays a crucial role in their success. By providing labour insurance policies for their employees, organisations can ensure the creation of a positive brand image. It helps them attract positive public opinion, investors, and talented professionals to their organisation. 

Risk Management 

Events like accidents and deaths threaten organisations' operations and functioning. However, if businesses have labour insurance policies as countermeasures, they can tackle risks efficiently. A labour insurance policy covers the organisation's financial and legal liabilities, fostering a secure workplace for employers and employees.  

Provides Peace of Mind 

Having a labour insurance policy provides peace of mind. For employers, it is a relief that they are complying with legal obligations. For employees, having a financial safety net in case of any unfortunate strikes during their employment eases their minds. Thus, it ultimately helps maintain a peaceful workplace environment. 

Also Read: Is Workman Compensation Insurance Policy Compulsory?

Here are the circumstances under which labour insurance policy coverage will be provided:

• Temporary disability or death of an employee. 
• Partial or total permanent disability of the employee.
• Legal expenses incurred with the company’s consent. 
• Bodily injuries incurred due to accidents occurred during employment in an organisation. 
•  Bodily injuries result from diseases or conditions aggravated by the employment. 

Other than getting coverage from a labour insurance policy, some add-ons can be included to provide extra protection. Here are some of them:

• Medical Extension: Employers can purchase this add-on, which applies when an employee is hospitalised for more than one day. 
• Sub-contractors Cover: This add-on will provide coverage to the subcontractors hired by contractors. As these subcontractors do not have insurance coverage, this add-on will be beneficial. 
• Terrorism Coverage: The add-on cover for losses and damages caused by terrorist activity. 

Certain situations are excluded from coverage by the labour insurance policy. These need to be considered before buying any policy. This will help avoid any issues during claims in the future.  

• Injuries caused by events like war, invasions, acts of foreign enemies, civil war, mutiny, rebellion, revolution, nuclear weapons, ionising radiation and hostilities, etc.
• Occupational diseases contracted by an employee.
•  Injuries do not result in partial disablement for more than three days. 
• Accidents or injuries incurred under the influence of drugs or alcohol. 
• Assumed liabilities under the agreements by the insured. 
• Employees not classified under the Workmen Compensation Act 1923 are not covered under insurance coverage. 
• Incapability or death is the result of an employee’s deliberate self-injury or intentional aggravations of accidental injury. 
• Diseases that are mentioned in Part C of the Workmen Compensation Act 1923. 
• The labour insurance policy will not cover changes in the policy after its activation. 
• Interest and penalties imposed on the insured under the law or otherwise.

Here are the steps for claiming a labour insurance policy in the event of an accident or injury in the organisation.

• Step 1 : First and foremost, a written notification letter must be sent to the insurance company. It must entail the details of the employee’s disablement or death accurately. 
•  Step 2 : An investigating officer will be sent by the insurance company to verify the claims made. 
• Step 3 : Collect all the necessary documents and evidence proving the rightfulness of the claim to the insurer. 
•  Step 4 : Submit the claim form along with collected documents to the insurance company for initiating the claim. It must include details like policy number, name of insured, injured worker’s name, date of the accident, brief description of the accident and nature of the claim. 
•  Step 5: Finally, when the insurance company has accepted and verified all the documents and details, the insurance claim will be released. 
• Also Read: How to Apply For Worker’s Compensation?

Here are all the documents that you require while making a work insurance coverage claim:

 For All Types of Claims 

• Completed and signed claim form
• Compensation records
• Medical invoices and bills

For Temporary Disablement Policy Claims 

• Completed and signed claim form
• Medical bills and invoices
• A medical certificate detailing the disablement 

 For Permanent Disablement Policy Claims

• Completed and signed claim form
• Medical certificate pertaining to the permanent disablement
• Memorandum of agreement between the insured employer and injured employee as per the Workmen Compensation Act. 

 For Fatal Claims Under Workmen Compensation Policy 

• Completed and signed claim form
• Death certificate
• Copy of postmortem report
• First Information Report (FIR), if required
• Witness statements, if available
• Completed Form A as per Employee’s Compensation Act 1923
• Also Read: Key Factors for Choosing Workmen Compensation Policy

Labour or workmen compensation policy is crucial for employee safety, security and overall well-being. Employers and businesses need to understand and invest in providing this coverage to their employees. 

It will help them gain their trust and maintain a positive work environment. Employers can compare workmen compensation policy online to get the best policy for their organisation’s and employees' coverage requirements. 

TATA AIG SME Insurance Policy is a great option for businesses. Our policies help you comply with legal laws, protect against financial losses, assist in risk management and provide lawsuit coverage. With the TATA AIG workers' compensation policy, businesses can achieve stability and improve their creditability. 

Also Read: Types of Worker’s Compensation Insurance Policies

 Who is eligible for ESI? 

Employees who earn a salary of ₹21,000 per month are eligible for coverage under Employee State Insurance (ESI). This policy covers factory workers and employees in shops, hotels, restaurants and certain establishments. 

 Is ₹2 lakh health insurance enough? 

Yes, ₹2 lakh health insurance is enough for small medical treatments, doctor’s appointments and medications. However, given the high risk of critical illnesses today, insurance coverage of this amount will not be sufficient for major treatments and surgeries. 

 What is the new name for Workmen's Compensation Act 1923? 

The new or another name for the Workmen Compensation Act 1923 is the Employee’s Compensation Act 1923.

 What is the maximum and minimum period of labour insurance policy? A labour insurance policy's minimum period can be as little as one month, while the maximum period needs to be one year. Moreover, at least two employees must buy labour insurance, and the maximum can be determined per the insurer’s terms and conditions.