In today’s highly global work environment, employees’ rights have also become important. To safeguard organisations from the threat of costly lawsuits, insurers offer workmen’s compensation policy. It is an insurance policy which covers statutory liability of an employer for death, bodily injury or occupational diseases sustained to employees. It is also known as the ‘Employees Compensation (Amendment) Bill’, ‘Employer’s Liability Insurance’ and ‘Worker Compensation Policy’.
The workmen’s compensation policy is the primary method by which employers can show their ability to satisfy the obligations imposed by the worker’s compensation statutes. As employers pay for this insurance, no contribution is required to be made by employees.
As per the Workmen Compensation Act in India, the main employer or contractor is liable to pay compensation to employees in case of any mishappening at the workplace. The compensation amount depends on the nature of the injury, the average monthly wages and age of the workman. However, if the employer has a workmen compensation insurance policy, it can secure itself from the legal liability. The liability of the company is unlimited and this policy helps in covering that unlimited liability of the employer.
Who can be insured under one policy?
The policy can be purchased by any employer or contractor engaging ‘workmen’ as defined in the Workmen Compensation Act to cover his liability towards them as per the common law.
Inclusions of the worker compensation policy
Mainly, the policy offers the following coverages:
- Permanent partial/total disablement
- Temporary disablement
- Legal costs and expenses incurred by the company
Read More: Who should buy workmen compensation policy?
It is possible to extend the policy to include medical expenses incurred on the necessary treatment.
Exclusions of the Worker Compensation Policy
In a workers’ compensation policy, no party is at the fault. However, a worker doesn’t get any compensation in the following cases:
- Any injury which doesn’t result in fatality or partial disability for a period more than 3 days
- The first three days of disability where the total disability is not more than 28 days
- Any injury caused to the employee under the influence of drugs or alcohol
- Willful disobedience of safety mechanisms
- Injury caused to employees of contractors of the insured unless the same is mentioned separately in the policy document
It is the responsibility of a company to provide safe and healthy working atmosphere for its employees. However, injured workers are one of the major financial liability issues for any business. With the help of a workmen compensation insurance policy, the employer can demonstrate its ability to meet the provisions as mentioned in the worker’s compensation statutes.
A 25-year old Ashwani Singh was working in a cloth mill when he died after his glove caught in the fast moving machine and later his body crushed into pieces. The victim was the breadwinner of the family of five and was about to get married in a few months. The mill owner paid the due compensation to the victim’s family. As the owner has already purchased the workmen’s compensation policy, the compensation was paid out of the policy coverage. Though it is not possible to curtail the emotional impact, the insurance helps in minimizing the financial impact. In the case of Ashwani, the insurance amount helped in meeting financial needs of the family even in his absence.