Workmen Compensation

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What are the conditions in workmen compensation policy?

As per the statutes of the Workmen’s Compensation Act, 1923, a workmen’s compensation policy is a mandatory cover which employers are required to buy for their employees. The workmen’s compensation policy covers the legal liability which the employer faces if the employee dies or becomes disabled during the course of employment. In case of any employment related injury or death, the employer is liable to compensate the employee and/or his family for the contingency suffered. The workmen’s compensation policy covers this liability giving the employer financial relief.

A workmen’s compensation policy, however, has certain conditions associated with it which should be fulfilled to avail coverage and get a claim. These conditions include the following –

  • The policy would cover accidental deaths, permanent disablements (full or partial), temporary disablements (full or partial) or personal injuries suffered by the employees
  • The death or injury should occur during the course of employment and because of the nature of employment. If the employee suffers any of the covered contingency outside the scope of employment, coverage would not be available. For instance, in case of a construction worker, if the worker falls and becomes disabled during the construction process, claim would be incurred in a workmen’s compensation policy. However, if, when returning home, the worker meets with an accident and becomes disabled, such a disability would not be covered because it did not arise because of employment.
  • For disabilities to be covered, they should last for more than 3 days after the accident
  • Legal costs incurred by the employer in case of a lawsuit filed by an employee would be covered only after the insurance company gives its consent for the same.
  • There is an exclusion list in the workmen’s compensation policy. Contingencies suffered due to such exclusions would not be covered by the policy.
  • The limit of sum insured is fixed as per the provisions of the Workmen’s Compensation Act, 1923 and its amendments. These limits are also revised from time to time. In case of a contingency, the claim would, therefore, depend on the maximum and minimum limits of sum insured applicable at the time of claim.
  • The premium for each type of occupation is fixed by the Insurance Information Bureau of India. It is represented per INR 1000 sum insured. 
  • Workers and employees covered under the workmen’s compensation policy are expected to take due safety measures to avoid possible contingencies. If any contingency occurs due to non-compliance with safety measures, the claim would not be paid.
  • The organisation cannot promise the payment of claim to the employee unless consent is obtained from the insurance company.
  • The insurance company should be intimated immediately if there is a claim
  • The number of employees who are to be covered under the policy and their respective wages should be disclosed by the employer so that the insurance company can calculate the premium.
  • If there is more than one workmen’s compensation policy, in case of claim, the liability of each insurance company would be calculated using the principles of contribution clause.

Every organisation which buys a workmen’s compensation policy should understand these conditions and fulfil them to enjoy proper coverage.

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