Are there any value-added services in workmen compensation?

Employee welfare is crucial for every business to ensure its smooth run and growth. Protecting the employee’s health and welfare benefits both employer and employees. It’s the legal responsibility of every employer to protect employees’ health and safety. The primary and effective way to comply with legal obligations is to avail workmen’s compensation policy.

Key Takeaways

• The “No-Fault” Advantage: Unlike standard litigation, the insurer pays the court-awarded amount without investigating why the accident happened, ensuring a “hassle-free” settlement process for the employer.

• The “Higher Of” Rule: Statutory payouts for death and disability have a “floor” (e.g., ₹1.2 Lakh for death). The policy pays whichever is higher: this floor amount or the formula based on the worker’s age and wages.

• The Table A vs. Table B Choice: Table A is the gold standard for full statutory compliance, while Table B is more restricted and typically excludes workers who fall under the strict legal definition of “workmen.”

• Filling the “Part C” Gap: Standard policies often exclude the most severe industrial illnesses (like Silicosis or Pneumoconiosis). Employers in mining or chemicals must add the Occupational Disease extension to be truly protected.

• Protecting the “Invisible” Workforce: Standard policies usually exclude contractual employees. Buying the specific extension for contractors is essential for businesses that rely on third-party labor.

• Comprehensive Restoration: Beyond just “paying out,” the policy supports the retraining of temporarily disabled workers, facilitating their return to productivity and reducing long-term attrition.

What is the workmen’s compensation insurance? What does it cover?

A workmen’s compensation policy is an insurance policy that secures employers from legal liabilities in case employees suffer injuries or die in a workplace accident or an illness arising due to or during the course of employment.

Who benefits from the WC policy?

Workers if injured at work can claim compensation. The worker courts decide the compensation. The WC insurance benefits the employer because the insurance pays for any award as decided by the courts. Also, workmen’s compensation is a no-fault insurance system. The insurer will simply pay the amounts as prescribed by the courts without getting into any details of why the accident was caused. The policy usually comes in two forms –

• Table A – Indemnifies the employer against legal liability to all employees under the Workmen Compensation Act, 1923, Fatal Accidents Act, 1855, and Common Law
• Table B – Indemnifies the employer against legal liabilities to employees as under the Fatal Accidents Act, 1855, and Common Law. Moreover, these policies do not cover employees that are excluded from the definition of ‘workmen’ in the Workmen Compensation Act, of 1923.

Coverage offered under the workmen’s compensation policy

• Death:

In case of the death of an employee arising due to or during the course of employment, dependants of the diseased employee will be compensated under the workmen compensation policy for the income loss.

Compensation payments will be higher than INR. 1,20,000 or 50% of monthly wages X relevant factor (age-based) as stated in Schedule IV of the Workmen Compensation Act, 1923. (Compensation can change based on the amendments to the act.)

• Permanent total disablement:

In case of complete disablement of an employee at the workplace arising out of or during the course of employment, the workmen compensation policy offers protection to employees.  Compensation is also provided for their replacement.

Compensation payable as per the terms of the Workmen’s Compensation Act, 1923, is higher than INR. 1,40,000 or 60% of monthly wages X relevant factor (based on age). These stated compensations are subject to change.

• Permanent partial disablement:

In case of an injury suffered by an employee due to a workplace accident or illness disables the employee to perform the job at full capacity, the policy compensates for the loss of income.

The extent of impairment determines the compensation. The calculation of compensation payable is similar to that of permanent total disablement. However, benefits are paid on a pro-rata basis depending on the extent of the disability.

• Temporary disablement (total or partial):

In case, an injury caused to an employee due to a workplace accident or illness makes the employee temporarily disabled to perform a job, then the policy pays for loss of income and for the cost of retraining after recovery.

As per the terms of the Workmen’s Compensation Act, of 1923, 25% of the monthly wages is payable as compensation on half monthly basis.

Value-added services in workmen’s compensation insurance

Policy Extensions

However, the workmen’s compensation policy also offers extensions to avail of the additional coverage. Add-ons come at an extra premium cost.

• Medical expenses cover: Medical expenses incurred on hospitalization or for surgical treatments of an injured employee
• Cover for legal cost: Legal expenses incurred by the employer relating to workmen’s compensation claims
• Contractual employees: Employees working under contractor and sub-contractor are usually excluded from the main workmen’s compensation policy. Contractual employee cover extends protection for employees who work under contractors.
• Occupational diseases: Illnesses as listed under part ‘C’ of Schedule III of the Workmen Compensation Act, 1923 such as pneumoconiosis, bagassosis, silico tuberculosis, bronchopulmonary diseases, and extrinsic allergy, etc. are excluded under the main workmen compensation policy. Hence, this extension offers coverage for occupational illnesses listed in part ‘C’.

How do WC policy extensions help?

Let’s say a person employed in a coal mining firm contracts coal workers’ pneumoconiosis by inhaling coal dust then compensation will be paid by the workmen compensation policy only if occupational diseases extension is availed.

Thus, value-added features of the workmen’s compensation policy enhance the coverage offered under the standard plan. Depending on the industry type, nature of business, and risk exposure, employers can include these extension or value-added features to the main workmen’s compensation policy to avail extensive coverage.

Summary Table: Standard vs. Extended WC Coverage

How to avail of the best WC Policy?

Having a robust workmen’s compensation policy is the need of the hour for every employer in this dynamic market environment. To compare insurance quotes online, make sure you visit SecureNow where you can make inquiries, discuss with our subject experts and let yourselves avail of the best benefits out of your WC policy or any other employee benefit plan suitable for your business.

Frequently Asked Questions (FAQs)

1. What is a “No-Fault” insurance system in the context of Workmen’s Compensation?

A) It means the insurance company provides the benefit regardless of who was at fault for the accident. As long as the injury occurred “out of and in the course of employment,” the insurer will pay the court-decided amount without getting into a blame game.

2. Why do I need a “Medical Expenses” add-on if the policy already covers disability?

A) Standard WC insurance is designed to pay a “settlement” for the loss of earning capacity. It does not automatically pay the hospital or surgeon’s bill. To ensure the actual costs of medical treatment are covered, you must purchase the Medical Expenses extension.

3. If I have a contractor working on my site, is he covered under my main policy?

A) Usually, no. Standard policies only cover your direct employees. To protect workers hired through a sub-contractor, you need to opt for the Contractual Employee Cover extension to avoid being held personally liable for their injuries.

4. What is “Table B” and why would someone choose it over “Table A”?

A) Table A provides the broadest legal indemnity, including the 1923 Act. Table B is narrower, covering only the Fatal Accidents Act and Common Law. It is sometimes used for higher-level employees who do not technically fit the legal definition of “workmen” but still require liability protection.

5. Are all “Occupational Diseases” covered by the standard policy?

A) No. Many severe respiratory and chemical diseases (listed in Part C of the Act) are excluded from the basic plan. If your workers are exposed to dust, fumes, or hazardous chemicals, you must add the Occupational Diseases extension to cover these specific risks.

About The Author

Rahul Kumar 

MBA Finance

With a wealth of experience in the insurance industry, Rahul is a seasoned writer specializing in articles related to workmen compensation policies (WC policies) for SecureNow. With 12 years of experience in the field, he has acquired in-depth knowledge and expertise in workmen compensation insurance, understanding its complexities and nuances. Their insightful articles provide valuable insights into the importance of WC policies for businesses and employees alike, offering practical advice and guidance on navigating the intricacies of insurance coverage. Trust him to deliver informative and engaging content, backed by years of experience and a passion for educating readers about insurance-related topics.