What is Workmen Compensation Insurance?
Workmen’s Compensation Insurance (which is also known as Workers’ compensation insurance or Employees Compensation Insurance) is a type of insurance policy that is there to provide coverage for your business’s employees who are injured or become disabled as a result of their jobs.
Even if you take all kinds of preventive measures, workplace accidents can unfortunately occur, and having this insurance will provide your employees with compensation without leaving your business at a financial loss.
For example, if you own a construction business, and on a worksite, something falls from a higher level and onto one of your construction workers, causing them to break their leg. If you don’t have workers’ compensation insurance, they can sue and claim compensation from you for their medical expenses. This can end up costing your business significantly.
Workmen’s compensation insurance is set out under the Workmen’s Compensation Insurance Act, 1923 and is there to protect you financially while still providing your employees with help in such situations.
How important is a Workmen’s Compensation Insurance?
- The fatal accidental incidental rate per 1,000 workers was 0.63% in 2014
- Industrial accidents caused 6,368 deaths in India from 2014 to 2017.
- In India, there were over 8,000 workplace-related accidents between 2014 to 2017.
What does a Workmen Compensation Insurance cover?
Accidental Injury
If your employees suffer any bodily injury due to an accident that occurred during the course of their employment.
Occupational Illness and Diseases
Sometimes, workplaces can expose employees to some chemicals or allergens that can be harmful to them and cause illness. This policy will help cover any medical treatments if they get sick.
Disability Cover
Workplace injuries may sometimes result in temporary or permanent disabilities (like loss of sight or limbs) and this insurance can help pay their medical bills and replace some of their lost wages.
Death Benefits
In the unfortunate case that an employee loses their life in a work-related accident, it covers for any funeral costs and provides death benefits to their beneficiaries.
Medical Coverage
Medical costs can be quite expensive, so this insurance covers your employees for any medical expenses from treating injuries due to accidents during their employment.
Advantages of Workmen Compensation Insurance Policy
- This insurance will protect your employees in case of any injury or illness that is a result of their job, and help them back to work.
- Protect your own business by reducing the risk of financial loss against financial losses in case one of your employees injured.
- Having a worker’s compensation will limit your business’s exposure to lawsuits, as it covers your employees’ work-related injuries.
- It also helps protect your business by keeping it in line with The Workmen’s Compensation Act, 1923.
- You will also get additional protection from being sued, as once a claim is settled, employees can’t file any additional claims for that incident.
What is excluded in a Workmen Compensation?
There are some situations where a Workmen Compensation insurance won’t cover your business and its employees, such as:
- It will not cover any employees of contractors (unless they are separately declared and covered)
- It will not cover an employee who is not considered “a workman” according to the law
- Any liabilities assumed under an agreement
- If an injury doesn’t result in disablement for more than 3 days, or in the worst case, a fatality
- The first 3 days of total disablement in cases where it lasts less than 28 days
- It will not cover any non-fatal injuries that were caused by an accident that was due to being under the influence of alcohol or drugs
- Any non-fatal injuries caused by an accident that was due to the employee willfully disobeyed or disregarded the safety rules and regulations
- It will not cover non-fatal injuries caused by an accident due to some safety or guard device was willfully removal or disregarded
- Injuries that were caused by an accident that was a result of perils like war, invasion, or an insurrection
How much does a Workmen Compensation Insurance cost?
The premium for your Workmen’s Compensation Insurance is based on the risk of your business experiencing a claim from an injured employee and how much that claim might end up costing. Since this amount is based on the type of business you own, places like a manufacturing plant will have a higher rate than something like a beauty supply store.
There are a lot of relevant factors that go into calculating workmen compensation premiums, such as:
- The nature of your business’s operations – for example, a factory environment will pose more risk to your employees than an office.
- The number of workers.
- The specific type of work they perform (employees are classified.
- The salary or wages of your employees.
- The location of your business’s operations.
- The safety standards that your business meets.
- The past claims made against your business by its employees.
Things to remember before getting a workmen compensation
- Focus on safety and security precautions. Make sure your employees know all the essential safety measures and best practices, and that there are regular safety checks so that you can reduce even the potential for accidents and injuries.
- Have a process to manage any workplace injuries. If there is a system to handle an onsite work injury sustained quickly, you can prevent them from becoming more severe and both reassure employees and prevent medical costs from increasing.
- Always check what is and is not covered under your workmen compensation policy. For example, some standard policies may not cover medical expenses for occupational diseases. So, read through the terms and conditions so you won’t be surprised by anything later.
- Check that you pick the right Sum Insured amount. Remember that when it comes to calculating workmen compensation insurance, a higher sum insured means that your premium too will be higher. But getting a lower sum insured might mean that you won’t get sufficient coverage
- Evaluate all the factors together, consider the risks posed to your employees as well as the sum insured and the premium to find the policy that gives you the best value.
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