{"id":13246,"date":"2019-07-10T13:27:52","date_gmt":"2019-07-10T13:27:52","guid":{"rendered":"https:\/\/insuropedia.in?p=2112"},"modified":"2026-04-02T08:50:48","modified_gmt":"2026-04-02T08:50:48","slug":"what-is-workers-compensation-and-how-does-it-work","status":"publish","type":"post","link":"https:\/\/securenow.in\/insuropedia\/what-is-workers-compensation-and-how-does-it-work\/","title":{"rendered":"What is Workers Compensation and how does it work?"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div><p><span style=\"font-weight: 400;\">The <a href=\"https:\/\/securenow.in\/group-insurance\/workmen-compensation-insurance\">Workmen\u2019s Compensation Act, 1923<\/a> makes it mandatory for an employer to compensate the worker and\/or the worker\u2019s family in case the worker dies, becomes injured, or suffers a disability during the course of his\/her employment. If the worker suffers from any physical disability due to the nature of his employment. Then the employer becomes liable to pay for the financial loss suffered by the worker and\/or his family. This financial loss might involve medical costs, legal costs, etc. A Worker&#8217;s Compensation policy takes care of this <\/span><span style=\"font-weight: 400;\">liability of the employer<\/span><span style=\"font-weight: 400;\">. The policy covers the compensation payable by the employer to the injured worker. Thereby saving the employer from considerable financial burden.\u00a0<\/span><\/p>\n<h2 data-path-to-node=\"5\">Key Takeaways<\/h2>\n<ul data-path-to-node=\"6\">\n<li>\n<p data-path-to-node=\"6,0,0\"><b data-path-to-node=\"6,0,0\" data-index-in-node=\"0\">The Financial Shield:<\/b> The policy protects employers from the &#8220;unlimited liability&#8221; that arises when a worker is injured. It covers the specific compensation amounts defined by the Act, saving the business from potential insolvency.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,1,0\"><b data-path-to-node=\"6,1,0\" data-index-in-node=\"0\">Dual-Table Protection:<\/b> A comprehensive policy uses <b data-path-to-node=\"6,1,0\" data-index-in-node=\"51\">Table A<\/b> to satisfy statutory laws (WC Act &amp; Fatal Accidents Act) and <b data-path-to-node=\"6,1,0\" data-index-in-node=\"120\">Table B<\/b> to protect the employer against broader claims under <b data-path-to-node=\"6,1,0\" data-index-in-node=\"181\">Common Law<\/b>.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,2,0\"><b data-path-to-node=\"6,2,0\" data-index-in-node=\"0\">Variable Payout Factors:<\/b> Compensation is not a flat fee; it is precisely calculated based on the <b data-path-to-node=\"6,2,0\" data-index-in-node=\"97\">average wage<\/b>, the <b data-path-to-node=\"6,2,0\" data-index-in-node=\"115\">age of the workman<\/b>, and the <b data-path-to-node=\"6,2,0\" data-index-in-node=\"143\">nature of the injury<\/b> (Total, Partial, or Temporary).<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,3,0\"><b data-path-to-node=\"6,3,0\" data-index-in-node=\"0\">Optional Extensions:<\/b> For a small additional premium, employers can add &#8220;Medical Extensions&#8221; to cover hospital, surgical, and transportation bills, as well as specific occupational diseases listed in <b data-path-to-node=\"6,3,0\" data-index-in-node=\"199\">Schedule III, Part C<\/b>.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,4,0\"><b data-path-to-node=\"6,4,0\" data-index-in-node=\"0\">The &#8220;3-Day&#8221; Exclusion:<\/b> The policy does not trigger for minor injuries. If an injury does not result in disablement for <b data-path-to-node=\"6,4,0\" data-index-in-node=\"119\">more than 3 days<\/b>, it is excluded from the compensation mandate.<\/p>\n<\/li>\n<li>\n<p data-path-to-node=\"6,5,0\"><b data-path-to-node=\"6,5,0\" data-index-in-node=\"0\">Conduct and War Exclusions:<\/b> Coverage is void if the injury results from <b data-path-to-node=\"6,5,0\" data-index-in-node=\"72\">alcohol\/drug abuse<\/b>, a refusal to follow <b data-path-to-node=\"6,5,0\" data-index-in-node=\"112\">security measures<\/b>, or external perils like <b data-path-to-node=\"6,5,0\" data-index-in-node=\"155\">war and terrorism<\/b>.<\/p>\n<\/li>\n<\/ul>\n<h2><b>How does Workmen&#8217;s Compensation policy save employers from financial losses?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The Workmen Compensation or Employee Compensation policy can be bought by an employer to cover his financial liability towards employees as stated under the Workmen\u2019s Compensation Act. The policy covers \u2018workmen\u2019 as defined under the Workmen\u2019s Compensation Act and pays <\/span><span style=\"font-weight: 400;\">financial compensation<\/span><span style=\"font-weight: 400;\"> if the workmen suffer a physical injury, death, or disability due to or over the duration of their employment.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The coverage amount would depend on the average wage of the workman, the nature of the injury suffered, and the workman\u2019s age. Gives coverage for death, and permanent disablement. Whether total or partial in nature, total temporary disablement, and any type of legal cost incurred by the employer.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\"><strong>The policy covers the employer\u2019s legal liability in two tables \u2013<\/strong>\u00a0<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Table A covers the liability faced by the employer when the workmen suffer accidental injuries as specified under the Workmen Compensation Act, 1923 and the Indian Fatal Accidents Act, 1855<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Table B covers the liability faced by the employer under common law<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Besides coverage for physical injuries and legal costs, the policy also allows extensions. That the employer chooses by paying an additional premium. The available extensions include the following :<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Compensation for the medical bills, hospital bills, surgical bills, transportation of the workman to the hospital, etc. in case of an accident covered under the Workmen\u2019s Compensation policy<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Diseases that are mentioned under Part C of Schedule III of the Workmen Compensation Act which are usually not covered but which arise during the course of employment<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Though the Workers Compensation policy has an extensive scope of coverage, there are some exclusions too. Common exclusions include the following :<\/span><\/p>\n<h3><strong>Injuries suffered-<\/strong><\/h3>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Due to war or war-like situations<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0When the workmen did not follow security measures<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Due to alcohol and\/or drug abuse<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Outside employment<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Due to terrorist activities<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Which do not result in disablement for more than 3 days<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Due to self-inflicted and deliberate causes<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0By third party workmen, hired by the employer for temporary jobs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u00a0Which were mentioned in a contractual agreement with the workman<\/span><\/li>\n<\/ul>\n<h3>Summary Table: Policy Structure and Coverage Tables<\/h3>\n<table data-path-to-node=\"3\">\n<thead>\n<tr>\n<td><strong>Feature<\/strong><\/td>\n<td><strong>Table A Coverage<\/strong><\/td>\n<td><strong>Table B Coverage<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span data-path-to-node=\"3,1,0,0\"><b data-path-to-node=\"3,1,0,0\" data-index-in-node=\"0\">Legal Basis<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,1,1,0\">WC Act, 1923 &amp; Indian Fatal Accidents Act, 1855.<\/span><\/td>\n<td><span data-path-to-node=\"3,1,2,0\">Common Law.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,2,0,0\"><b data-path-to-node=\"3,2,0,0\" data-index-in-node=\"0\">Primary Focus<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,2,1,0\">Statutory liabilities for death and disability.<\/span><\/td>\n<td><span data-path-to-node=\"3,2,2,0\">Negligence-based liabilities outside specific Acts.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,3,0,0\"><b data-path-to-node=\"3,3,0,0\" data-index-in-node=\"0\">Calculation<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,3,1,0\">Based on age, wages, and injury severity formulas.<\/span><\/td>\n<td><span data-path-to-node=\"3,3,2,0\">Based on court decrees and proven damages.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,4,0,0\"><b data-path-to-node=\"3,4,0,0\" data-index-in-node=\"0\">Medical Extension<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,4,1,0\">Optional (Additional Premium required).<\/span><\/td>\n<td><span data-path-to-node=\"3,4,2,0\">Optional (Additional Premium required).<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,5,0,0\"><b data-path-to-node=\"3,5,0,0\" data-index-in-node=\"0\">Legal Costs<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,5,1,0\">Defense costs for labor court cases.<\/span><\/td>\n<td><span data-path-to-node=\"3,5,2,0\">Defense costs for civil court cases.<\/span><\/td>\n<\/tr>\n<tr>\n<td><span data-path-to-node=\"3,6,0,0\"><b data-path-to-node=\"3,6,0,0\" data-index-in-node=\"0\">Applicability<\/b><\/span><\/td>\n<td><span data-path-to-node=\"3,6,1,0\">Mandatory for all &#8220;Workmen&#8221; as defined by law.<\/span><\/td>\n<td><span data-path-to-node=\"3,6,2,0\">Protective layer for non-statutory legal claims.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">A <\/span><span style=\"text-decoration: underline;\"><a href=\"https:\/\/securenow.in\/group-insurance\/workmen-compensation-insurance\"><span style=\"font-weight: 400;\">Workmen\u2019s Compensation policy<\/span><\/a><\/span><span style=\"font-weight: 400;\"> is an important requirement for all businesses which are liable to face the financial impact of any physical harm suffered by their employees during the course of employment. The policy provides good coverage against the unlimited liability faced by organizations.<\/span><\/p>\n<h3 data-path-to-node=\"8\">Frequently Asked Questions (FAQs)<\/h3>\n<h4 data-path-to-node=\"9\"><b data-path-to-node=\"9\" data-index-in-node=\"0\">1. What is the difference between Table A and Table B in my policy?<\/b><\/h4>\n<p data-path-to-node=\"9\"><strong>A)<\/strong> Table A covers your specific legal duties under the Workmen&#8217;s Compensation Act and the Fatal Accidents Act. Table B protects you against &#8220;Common Law&#8221; claims, which are lawsuits where a worker might sue for negligence outside of the specific formulas defined in the Act.<\/p>\n<h4 data-path-to-node=\"10\"><b data-path-to-node=\"10\" data-index-in-node=\"0\">2. Does the policy automatically pay for my worker&#8217;s hospital bills?<\/b><\/h4>\n<p data-path-to-node=\"10\"><strong>A)<\/strong> Not necessarily. The basic policy covers the &#8220;Statutory Compensation&#8221; (the lump sum for disability or death). To have the insurance company pay for actual <b data-path-to-node=\"10\" data-index-in-node=\"224\">medical, surgical, and hospital bills<\/b>, you must opt for a &#8220;Medical Extension&#8221; by paying an additional premium.<\/p>\n<h4 data-path-to-node=\"11\"><b data-path-to-node=\"11\" data-index-in-node=\"0\">3. Why is there no coverage for injuries lasting only 2 days?<\/b><\/h4>\n<p data-path-to-node=\"11\"><strong>A)<\/strong> The Act includes a &#8220;waiting period.&#8221; Minor injuries that do not cause disablement for more than <b data-path-to-node=\"11\" data-index-in-node=\"158\">three days<\/b> are considered insufficient to trigger a statutory compensation claim for lost wages or disability.<\/p>\n<h4 data-path-to-node=\"12\"><b data-path-to-node=\"12\" data-index-in-node=\"0\">4. Am I protected if an employee is injured because they refused to wear a safety harness?<\/b><\/h4>\n<p data-path-to-node=\"12\"><strong>A)<\/strong> Generally, no. If the employer has provided the necessary <b data-path-to-node=\"12\" data-index-in-node=\"149\">security measures<\/b> and the workman willfully fails to follow them, the injury is typically excluded from coverage. This encourages a culture of safety compliance among workers.<\/p>\n<h4 data-path-to-node=\"13\"><b data-path-to-node=\"13\" data-index-in-node=\"0\">5. Are &#8220;Third-Party&#8221; workers or temporary contractors covered under my policy?<\/b><\/h4>\n<p data-path-to-node=\"13\"><strong>A)<\/strong> Standard policies usually exclude <b data-path-to-node=\"13\" data-index-in-node=\"113\">third-party workmen<\/b> or temporary contractors hired through an agency. To cover these individuals, you must specifically mention them in your policy or ensure they have their own independent coverage.<\/p>\n<h4><b>About The Author<\/b><\/h4>\n<p><strong>Rahul Kumar\u00a0<\/strong><\/p>\n<p><span style=\"font-weight: 400;\">MBA Finance<\/span><\/p>\n<p><span style=\"font-weight: 400;\">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.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Workmen\u2019s Compensation Act, 1923 makes it mandatory for an employer to compensate the worker and\/or the worker\u2019s family in case the worker dies, becomes injured, or suffers a disability during the course of his\/her employment. If the worker suffers from any physical disability due to the nature of his employment. Then the employer becomes [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_lmt_disableupdate":"no","_lmt_disable":"no","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[297,295],"tags":[60],"class_list":["post-13246","post","type-post","status-publish","format-standard","hentry","category-features-workmen-compensation","category-workmen-compensation","tag-workmen-compensation-insurance-policy"],"acf":[],"modified_by":"SecureNow","_links":{"self":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts\/13246","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/comments?post=13246"}],"version-history":[{"count":13,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts\/13246\/revisions"}],"predecessor-version":[{"id":36096,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/posts\/13246\/revisions\/36096"}],"wp:attachment":[{"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/media?parent=13246"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/categories?post=13246"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/securenow.in\/insuropedia\/wp-json\/wp\/v2\/tags?post=13246"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}