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Protect your employees against workplace injuries while staying fully compliant with labor laws.
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PRODUCT OVERVIEW
An Employee’s Compensation Policy is a statutory liability insurance that protects businesses against compensation claims arising from employee injury, disability, occupational illness, or death during the course of employment. For businesses with operational, on-site, contractual, manufacturing, logistics, or labour-intensive workforces, workplace incidents can lead to significant financial liabilities. In the absence of insurance, these compensation costs, legal liabilities, and related expenses must be borne directly by the employer.
LEGISLATIVE
The Employee’s Compensation Act, 1923, establishes the legal framework for employee compensation in India and defines an employer’s statutory liability in case of workplace-related injury, disability, occupational illness, or death. The Act defines employer liabilities, compensation eligibility, payout calculation, and the categories of employees covered under the law.
The Employee’s Compensation Act defines the compensation amounts, based on employee wages, age factor and injury.
FORMULA
50% x Monthly Wages x Age Factor
Example Wage
₹13,500; Age = 28; Age Factor = 211.79
(₹1,20,000 is the minimum compensation)
COMPENSATION
50% × 13,500 × 211.79 = ₹14,29,583
((or ₹1,20,000 minimum, whichever is higher)
FORMULA
60% × Monthly Wages × Age Factor
EXAMPLE
Wage = ₹13,500; Age = 28;
Age Factor = 211.79
COMPENSATION
60% × 13,500 × 211.79 = ₹17,15,499
FORMULA
% Loss of Earning Capacity × Full Compensation Amount (PTD)
EXAMPLE
Loss of one eye = 40% loss of earning capacity (per Schedule I).
Full Compensation (PTD) = ₹17,15,499
COMPENSATION
40% × 17,15,499 = ₹6,86,200
FORMULA
25% × Monthly Wages (paid half-monthly)
EXAMPLE
Wage = ₹13,500
These calculations are based on Schedules I and IV of the Act. Employers are legally obligated to pay these amounts regardless of their financial capacity.
COMPENSATION
25% × 13,500 = ₹3,375 per month
Paid as ₹1,687.50 every 15 days during the disability period
The maximum monthly wage considered under the Act is capped at ₹15,000. Even if an employee earns more, calculation is restricted to this limit.
The percentage reduction in an employee’s ability to earn. For specific injuries, the % is defined in Schedule I of the Act. For others, it must be assessed by a qualified medical practitioner.
A legally defined multiplier based on the employee’s age at the time of the accident, as specified in Schedule IV of the Act.
Paid after a 3-day waiting period. If disability exceeds 28 days, payment starts from the first day. The maximum duration is 5 years.
In the case of death, the employer must pay an additional ₹15,000 towards funeral expenses.
Reasons
Helps businesses comply with the Employee’s Compensation Act, 1923 and fulfil employer liability obligations under Indian labour laws.
Workplace injury or death claims can lead to substantial compensation payouts, which may directly impact business cash flow if uninsured.
Many government projects, corporates, factories, and principal employers require WC insurance as part of vendor onboarding and contract compliance.
Essential for businesses employing factory workers, contractors, technicians, drivers, warehouse staff, or field employees exposed to operational risks.
Helps businesses manage legal liability arising from workplace accidents, occupational diseases, and employee compensation claims.
INCLUSIONS & EXCLUSIONS
Legal Liability Coverage
The policy covers employer liability under:
Employee's Compensation Act, 1923 (including amendments)
Additional liability beyond Statutory law, as per agreed terms in the policy
Fatal Accident Act 1955
Core Coverage
Accidental death of an employee
Permanent total or partial disability
Temporary disability due to workplace injury
Additional Coverage (Add-ons)
Occupational Diseases (Schedule III)
Covers diseases specified under Schedule III of the Employee's Compensation Act, 1923, including illnesses caused by exposure to hazardous or toxic substances during employment.
Contractors & Subcontractors
Extends coverage to contractors, subcontractors, and their employees engaged in the insured's business operations, subject to policy terms.
Medical & Surgical Expenses
Covers expenses incurred for medical treatment or surgical procedures arising from workplace injuries, where hospitalisation exceeds 24 hours.
War & civil disturbance
Injuries arising from war, riots, civil unrest, or acts of terrorism are not covered.
Self-inflicted injuries
No coverage for injuries intentionally caused by the employee.
Intoxication-related incidents
Claims are not valid if the employee was under the influence of alcohol or drugs at the time of the incident.
Pre-existing conditions
Injuries or illnesses existing before the policy start date are excluded.
Outside work scope
Incidents occurring outside working hours or not related to job duties are not covered.
Fines & legal penalties
Any penalties, fines, or interest imposed on the employer under law are not covered.
WHY INSURANCE
Workmen’s Compensation Insurance is essential for any organisation that employs workers and is responsible for their safety and well-being at the workplace. It is particularly relevant for:
who want to protect their organisation from legal and financial liabilities arising from workplace incidents
who engage labour for project-based or on-site work
across industries such as manufacturing, construction, logistics, and services
who are exposed to higher workplace risks
WHY INSURANCE
To purchase an Employee’s Compensation Policy online, you need to provide basic business and employee-related information. Keep the following documents ready:
Completed proposal form
Signed by an authorized signatory, detailing the nature of the business
Employee details
Including the number of workers and their job roles
Salary or wage records
Of employees for accurate premium calculation
Additional documents
If required by the insurer based on the nature of the business
CLAIMS
Share incident details, employee information, and policy details with us at help@coverfox.com to initiate the claim process.
The Coverfox team reviews the reported incident and guides the employer on the required claim procedures and next steps.
Provide supporting documents such as employee records, incident details, medical reports, FIR copies (if applicable), and policy information.
The insurer reviews the submitted documents and conducts claim verification based on policy terms and incident details.
Once verification is completed successfully, the insurer processes the compensation payout as per the approved policy coverage and terms
Coverfox Edge
Get end-to-end support from the Coverfox team during claim intimation, documentation, and insurer coordination.
Buy your WC policy online with a simple documentation process and faster turnaround time.
Customise coverage based on workforce type, industry risk, and business requirements.
We partner with insurers registered with the Insurance Regulatory and Development Authority of India (IRDAI) to offer compliant Workmen Compensation Insurance solutions.
A Workmen Compensation Policy (WC policy) is insurance that covers an employer's legal liability for employee injury, disability, or death due to workplace accidents, ensuring compensation is paid as per law.
Yes, under the Employee's Compensation Act, 1923, employers must compensate employees for work-related incidents. A WC policy helps meet this obligation without financial strain.
Any organisation employing workers—including businesses, contractors, and companies with manual or field staff—should buy this policy to manage risk and ensure compliance.
It covers compensation for death, permanent or partial disability, and temporary disability, along with medical expenses and occupational diseases as per policy terms.
Yes, coverage can be extended to contractual and subcontracted workers if declared at the time of purchase, depending on the policy terms.
Premium depends on the nature of business, employee roles, risk exposure, number of workers, wages, and coverage limits selected.
Yes, you can buy WC insurance online by submitting basic business and employee details, with quick policy issuance.
It is calculated based on wages, age, and type of injury, using standard formulas defined under the Employee's Compensation Act.
The employer must inform the insurer, submit required documents, and the claim must be verified before compensation is paid as per policy terms.
The employer remains legally liable to pay compensation, which can lead to financial loss, penalties, and reputational risk.
Disclaimer
The coverage, inclusions, exclusions, terms, and conditions under an Employee’s Compensation Insurance Policy may vary depending on the insurer and the plan selected. The information provided is based on standard industry practices and is intended for general informational purposes only. Final coverage applicability and claim settlement shall be subject to the respective insurer’s policy wording and underwriting guidelines.
Coverage under an Employee’s Compensation Insurance Policy applies when the employee is engaged in work related to the employer’s business, and the incident occurs during the course of employment. A valid employer–employee relationship must exist for the claim to be admissible.
