business insurance

Workmen Compensation Insurance – Why Every Small Business Needs It

By May 10, 2019 No Comments
workmen compensation insurance

The backbone of every business is its workforce. If, for whatever unforeseen circumstances, the back breaks, the chances are that the company will be brought to its knees. Thus, it’s essential that you protect your workforce at every juncture.

In a place of work, especially in accident-prone industries such as transportation, warehousing, and manufacturing, among others, unforeseen injuries are commonplace, some more severe than others. If an employee gets injured in a place of work, an employer in many cases is duty bound to pay compensation to him or his family, failing which the employer could face a slew of legal suits or union strikes or both.

Compensation can be costly, and in an industry where injuries are all too commonplace, financially unviable. This is where a Workmen Compensation Insurance can come to a company’s rescue. To save the company from the various financial challenges, purchasing a suitable Workmen Compensation Insurance is a must for every organization.

In this article, we discuss all about Workmen Compensation Insurance and why small businesses must have it.

What is Workmen Compensation Insurance?

Employers are legally bound to take care of their employees. But accidents and mishaps can happen, even if care is taken. Imagine one of your employees meets with an accident while he’s at work. The accident leaves the worker seriously injured and bedridden for six months. At such times, the Workmen Compensation Insurance can cover the medical costs and compensate for the loss of wages that the company is liable to pay to the employee. Workers Compensation Insurance offers two types of coverage:

  1. Coverage for legal liabilities to employers
  2. Coverage towards providing compensation for employees’ injury

This insurance is the most efficient manner of tackling unforeseen risks of accidents and injuries. It is also known as the Employer’s Liability Insurance. The compensation is provided under the provisions of the Workmen Compensation Act 1923, Fatal Accidents Act 1855 and at common law.  

What are the liabilities of the employer under the Workers Compensation Act?

Employers are legally obligated to protect their employees and have liabilities towards their employees. Their liabilities are as follows:

  • Death of an employee due to accident
  • Permanent Total Disablement (PTD) of an employee due to a workplace accident or disease caused due to the conditions of employment
  • Temporary Total Disablement (TTD) of an employee due to an accident at work or a disease caused due to the conditions of employment
  • Permanent Partial Disablement (PPD) of an employee due to a workplace accident at or a disease caused due to the conditions of employment
  • Coverage for Maternity — with/without 9 months waiting period

Why does a business need Workmen Compensation Insurance?

A workplace is prone to accidents of various kinds. Some businesses require their employees to expose themselves to hazardous items and situations, that could potentially be life-threatening or risk an injury. An affordable way to deal with situations that require a company or business to compensate and safeguard an employee who has suffered an injury during their office time is to acquire Workmen Compensation insurance.

This insurance covers low wages and the total price of the medical treatment. The cost of the coverage varies on the kind of claim that has been filed, and the level of risk that an employee is under. For example, if a job involves a higher level of risk like death, the coverage issued will be more compared to other risks.

Workers Compensation is similar to other insurance policies designed for employees, but the difference here is that the employer bears all the costs of purchasing the policy and paying premiums. The payable premium also depends on factors like the experience of the employees and the number of times a claim has been filed for them in the past.

The coverage provided by Workmen Compensation Insurance

The coverage includes compensation for the liability of the employer in the case of injury, bodily harm or death as an occupational hazard. Diseases that are endured and sustained by employees are also included in the cover plan of the insured.

The insurance only covers the costs that are not met in the compensation offered to them, during the scope of their employment. The plan coverage includes:

  • Injuries caused by an accident in the course of an employee’s time at the company.
  • A disease which has been aggravated due to the conditions of the employment.
  • Temporary disablement due to proceedings of work.
  • Permanent disablement or death.
  • All the legal costs and expenses incurred with the consent of the company.

Additional covers, that can be availed by paying premium charge on the total amount, include tariff rate on a labour specific contract and if the contract is for the materials and labour, the value of labour will be determined by the merits, that can be subjected to a minimum of 75% of the amount in the contract.

Exclusions from the insurance

As with every insurance, it is important to pay attention to the exclusions from the Workmen Compensation Insurance.

  • Injuries that are not fatal or cause partial disablement.
  • The initial 3 days of disablement, where the accumulative disablement is short of 28 days.
  • War, riot or nuclear-related injuries to employees.
  • Injuries that are a result of the removal or carelessness of a security device.
  • Accidents that occur under the influence of any toxic substances, like alcohol or drugs.
  • Liability of the insured assumed under an agreement.
  • Employees who are not classified as “workmen” under the Workmen Compensation Act.
  • The changes that have been inserted post the commencement of the policy.

Exploring business insurance options

A number of small business owners assume that they require only the basic insurance plans such as general liability insurance, property insurance and group health insurance. But most of them are wrong. Today, with complex risks and targeted insurance plans for different risks, just one type of insurance isn’t sufficient even for small businesses.

Every business must find insurance plans that are specific to their business and to the industry that they operate in. To eliminate confusion and to avoid the possibility of ending up with an insurance that has limited benefits, business owners must seek advice and guidance from insurance agents and brokers, or consult with one after conducting their own research on the subject.

Weighing in all options that are available in the market will allow a business owner to understand the different claims and what the coverages include or exclude. That will allow a business to tailor the plan in a manner which promises to make the entire process smooth sailing.

PlanCover helps customers plan and strategize their business insurance needs specific to the business and industry. PlanCover chooses the best suitable options for different businesses from a large pool of insurance providers. To know more about how we can help you with your business insurance strategy, visit our website.

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