Workplace accidents don't wait for convenient moments. Under the Employees' Compensation Act 1923, every employer is legally liable to compensate workers for injury, disability, and death arising from employment — and failure to pay is a criminal offence. the insurer's Workmen Compensation (WC) Policy transfers this legal liability to the insurer, ensuring injured workers are compensated promptly, employers stay legally protected, and the business continues without absorbing catastrophic one-time costs.
Workmen Compensation Insurance · WC Policy · Employees’ Compensation Act 1923 · Employer Statutory Liability
Workmen Compensation Insurance (also called WC Policy or Employees' Compensation Insurance) is a statutory liability insurance that protects employers against their legal obligation to compensate workers who suffer injury, disability, or death due to work-related accidents or occupational diseases under the Employees' Compensation Act 1923 (formerly the Workmen's Compensation Act 1923, amended 2010). The Act makes it mandatory for employers in specified industries to compensate affected employees — and the WC policy transfers this financial liability from the employer to the insurer, ensuring both legal compliance and business financial protection.
If a worker dies due to a workplace accident, the policy compensates their legal dependents — calculated as 50% of monthly wages multiplied by a relevant age factor or ₹1.2 lakh, whichever is higher. Provides critical income replacement for the deceased worker's family.
DEATHWhen a worker becomes permanently and completely unable to work — loss of both hands, both legs, both eyes, or other listed injuries — compensation is 60% of monthly wages × age factor or ₹1.4 lakh, whichever is higher. Reflects the permanent loss of earning capacity.
PERM. TOTALFor injuries causing permanent but partial loss of function — loss of one hand, partial hearing loss, loss of fingers — compensation is a percentage of the permanent total disability amount proportional to the assessed loss of earning capacity. Listed in Schedule I Part II of the EC Act.
PERM. PARTIALWhen a worker is temporarily unable to work (partially or fully) following a workplace injury — but is expected to recover — 25% of monthly wages is paid every half month (fortnight) during the disability period, for up to a maximum period specified by the Act.
TEMP. DISAB.Covers medical treatment costs for work-related injuries and illnesses — hospitalisation, surgery, medicines, and doctor consultations — subject to the policy variant selected. Medical extension add-on provides enhanced medical coverage up to ₹1 lakh or more for specified scenarios.
MEDICALCovers legally approved expenses related to WC claim settlements — including legal fees and court proceedings where compensation claims are adjudicated by the Commissioner of Employees' Compensation or courts. Legal costs can be significant in contested claims.
LEGALFull Coverage Scope — Injury, Disability, Death, Medical & Occupational Diseases
The the insurer WC Policy provides comprehensive coverage across all categories of work-related employee loss — from minor temporary injuries through to permanent total disability and death.
The fundamental coverage trigger — a bodily injury caused by an accident arising out of and in the course of employment:
Covered accident scenarios:
• Construction site accidents: Falls from height, collapse of structures, being struck by falling objects, electrocution, machinery accidents
• Factory and manufacturing accidents: Machine entanglement, crush injuries, chemical burns, eye injuries from flying debris, heat or flame exposure
• Transport and logistics accidents: Road accidents during employment duty, loading/unloading injuries, warehouse accidents
• Mining accidents: Roof falls, gas explosions, flooding, equipment accidents in underground or surface mining operations
• Chemical and hazardous material accidents: Spills, splashes, inhalation incidents at chemical plants, refineries, and manufacturing facilities
• Agricultural and plantation accidents: Machinery accidents, animal-related injuries, heat exposure in plantation work
The "course of employment" test:
The injury must occur during working hours and while the employee is performing employment duties — on-site or away from the premises if assigned by the employer. Commuting accidents (to and from work) are generally not covered unless the employer provided the transport. Injuries during authorised breaks on employer premises are typically covered.
Permanent Total Disability (PTD):
The most serious non-fatal outcome — the worker is permanently and completely unable to engage in any employment. Listed PTD injuries under Schedule I of the EC Act include:
• Loss of two limbs (both hands, both arms, both legs, or combinations)
• Total loss of sight in both eyes
• Other injuries that the Act specifically classifies as resulting in 100% loss of earning capacity
Compensation: 60% of monthly wages × relevant factor (based on age) or ₹1.4 lakh, whichever is higher.
Permanent Partial Disability (PPD):
The worker permanently loses function of a specific body part or faculty but retains some earning capacity:
• Loss of one hand or arm, one leg, one eye, one ear
• Loss of specific fingers or toes (each has a defined percentage in Schedule I Part II)
• Partial hearing loss, partial vision loss in one eye
If the injury is listed in Schedule I Part II — a defined percentage of the PTD compensation is payable. If not listed — a qualified medical practitioner assesses the percentage loss of earning capacity and compensation is proportional.
Temporary Disablement:
The worker is unable to work (partially or completely) due to the injury, but is expected to recover:
• Compensation: 25% of monthly wages, paid every half month (fortnightly) during the disablement period
• Minimum disablement period for coverage: more than 3 days (injuries causing less than 3 days of disablement are not compensable under the Act)
• Paid during recovery until the worker returns to work or the condition becomes permanent
Medical Expenses (Standard and Extended):
Under the basic WC policy, limited medical coverage may be included. Enhanced medical coverage is available through add-ons:
• WC with Medical Cover: Includes medical expense reimbursement for treatment of work-related injuries — hospitalisation, surgery, medicines, consultations
• WC with Medical Extension ₹25,000: Additional medical extension cover of ₹25,000 for minor/moderate injuries
• Medical Extension Add-on (up to ₹1 lakh+): Enhanced medical coverage beyond the base policy for more significant medical costs in specific scenarios
Occupational Diseases (Add-On):
Occupational diseases are conditions that develop over time due to hazardous workplace exposure — not single-incident injuries:
• Silicosis (from silica dust exposure in mining and construction)
• Asbestosis (from asbestos exposure)
• Pneumoconiosis (from coal dust in mines)
• Byssinosis (from cotton dust in textile mills)
• Chemical-induced diseases (from long-term exposure to industrial chemicals)
• Hearing loss from prolonged industrial noise exposure
Standard WC policies exclude occupational diseases — the Occupational Diseases Add-on specifically brings these within coverage, essential for mining, chemical, textile, and other high-exposure industries.
Legal Expenses:
WC claim settlements may go before the Commissioner of Employees' Compensation or, for disputes, to civil courts. Legal representation costs are covered — including advocate fees for representing the employer in proceedings under the EC Act.
Terrorism Cover (Add-On):
Covers injuries caused by acts of terrorism or violent employee behaviour (e.g., inter-worker violence during labour disputes) — relevant for industries with large workforces and potential for labour unrest.
Statutory Compensation Formula — How WC Amounts Are Calculated Under EC Act 1923
The Employees' Compensation Act 1923 prescribes the formula for calculating compensation for different types of workplace injuries. Understanding these formulas helps employers determine the right WC policy coverage level for their workforce.
| Type of Loss | Compensation Formula | Minimum Amount | Notes |
|---|---|---|---|
| Accidental Death | 50% of monthly wages × relevant age factor | ₹1.2 lakh (whichever is higher) | Age factor from Schedule IV — higher for younger workers. Paid to legal dependents. |
| Permanent Total Disability | 60% of monthly wages × relevant age factor | ₹1.4 lakh (whichever is higher) | Higher than death benefit — reflects ongoing lifetime income loss. Listed PTD injuries in Schedule I. |
| Permanent Partial Disability (Listed) | % of PTD amount × percentage specified in Schedule I Part II for that injury | Proportional to listed percentage | E.g., loss of a thumb = defined % of PTD amount. Loss of index finger = different %. Refer to Schedule I Part II. |
| Permanent Partial Disability (Unlisted) | Doctor assesses % loss of earning capacity; % of PTD amount proportional to this assessment | Based on medical assessment | For injuries not specifically listed in Schedule I Part II — medical expert determines earning capacity reduction. |
| Temporary Disablement | 25% of monthly wages paid every half month (fortnightly) | N/A — paid as earned | Minimum disability period: more than 3 days. Paid until worker returns to work or condition becomes permanent. |
The compensation formula multiplies the wage-based amount by an "age factor" from Schedule IV of the EC Act. This factor is higher for younger workers (reflecting more years of lost earning capacity) and lower for older workers:
• Age 16: factor = 228.54
• Age 20: factor = 224.00
• Age 25: factor = 218.41
• Age 30: factor = 211.38
• Age 35: factor = 202.56
• Age 40: factor = 190.90
• Age 45: factor = 174.90
• Age 50: factor = 153.51
• Age 55: factor = 127.40
• Age 60: factor = 99.37
Example calculation — Accidental Death:
Worker, age 30, monthly wages ₹15,000:
50% × ₹15,000 × 211.38 = ₹15,85,350
vs minimum ₹1.2 lakh
→ Compensation = ₹15,85,350 (much higher than minimum)
This example shows why WC claims for young, higher-wage workers can be very large — well above the statutory minimums that many employers focus on.
The "monthly wages" figure used in WC compensation calculation is critical — it directly determines the compensation quantum:
• What counts: Basic wages, dearness allowance (DA), and other regular cash payments that the worker receives regularly as part of employment. The EC Act caps wages at ₹8,000/month for calculation purposes even if the worker earns more.
• What is excluded: Bonus, overtime pay, special allowances that are not regular, travelling allowances, and reimbursements
• Wage cap: The maximum wage for WC calculation is currently ₹8,000/month — even if the actual worker earns ₹25,000/month, the compensation formula uses ₹8,000 as the ceiling
• Policy implication: Employers should declare the actual wages of all covered workers to the insurer at policy inception — typically by category (unskilled, semi-skilled, skilled, supervisory) rather than individual. Undeclared wages can lead to proportional reduction in claim payment.
• Premium impact: Higher declared wages = higher premium. But also higher claim protection. Probitas advises on optimal wage categorisation for premium efficiency without under-insurance risk. Call 022 4302 0000.
Two statutory schemes provide worker injury protection in India — understanding which applies to your workforce is the first step in compliance:
• ESI (Employees' State Insurance): Mandatory for employees earning below ₹21,000/month in notified areas and establishments with 10+ employees (certain sectors 20+). Funded jointly by employer (3.25% of wages) and employee (0.75%). Provides broader benefits including medical care, cash benefits for temporary disability, permanent disability pension, and maternity benefits through ESI hospitals and dispensaries.
• WC Policy: Applies to workers NOT covered under ESI (above ₹21,000/month, in non-notified areas, in Schedule II industries). A private insurance policy purchased by the employer. Provides compensation per the EC Act formula. More flexible — can be purchased for any amount of workers regardless of establishment size.
• Can you have both? If some workers are ESI-covered and others are not (e.g., a factory where permanent employees are ESI-covered but contracted daily labourers are not), you need both — ESI contributions for ESI-covered workers and WC policy for the rest.
Probitas advises employers on the correct application of ESI vs WC to their specific workforce composition. Call 022 4302 0000.
Named Policy · Unnamed Policy · Basic WC · WC with Medical Cover · WC with Medical Extension
the insurer offers WC policies in multiple configurations — employers can choose the worker identification method (named vs unnamed) and the coverage level (basic through enhanced medical) to match their workforce and risk profile.
Named Policy — for fixed, identified workforces:
Each individual worker covered under the policy is specifically named in the policy schedule. Best suited for:
• Businesses with a stable, fixed roster of employees whose identities are known and unlikely to change frequently
• High-value or high-skill workers where the employer wants specific individual coverage
• Small workforces where maintaining an accurate named roster is administratively simple
Practical implication of named policies: If a worker is injured but is not specifically named in the policy schedule, their claim may be excluded. This makes roster management critical — new hires should be added to the named policy promptly; departed employees should be removed (though this reduces premium refund complexity).
Unnamed Policy — for flexible, changing workforces:
Covers all workers under a category or class description without naming individuals. Best suited for:
• Businesses with seasonal, temporary, or contract-based workforces where individual names change frequently — construction sites, agricultural operations, textile mills
• Large workforces where maintaining a named roster is administratively impractical
• Industries where casual daily labourers are employed intermittently
Practical benefit of unnamed policies: Any worker in the covered category who is injured is covered — regardless of whether the employer formally identified them before the accident. This provides broader protection and eliminates the gap risk of unnamed workers having claims rejected.
Premium basis: Named policies are based on specific individual wage declarations. Unnamed policies are based on the total estimated wages for the covered worker category over the policy period — with adjustment at the end of the year based on actual wages paid (in some policy structures).
Basic WC Policy:
The foundational coverage — compensates for the statutory loss of income due to workplace accidents resulting in death, permanent disability, or temporary disability. Does not include medical treatment costs as a standard coverage.
• Covers compensation amounts per EC Act formula
• Covers legal expenses for claim adjudication
• Does not cover actual medical treatment bills
• Suitable for employers who fund their own medical treatment costs for injured workers or where ESI provides medical care
WC Policy with Medical Cover:
The Basic WC policy plus coverage for medical expenses incurred during the treatment of work-related injuries:
• Hospitalisation costs, surgery, medicines, doctor consultations
• Treatment must be for the covered work-related injury
• Medical sub-limit as specified in the policy
• Recommended for most employers — medical treatment costs can be substantial, especially for serious injuries requiring multiple surgeries or extended hospitalisation
WC Policy with Medical Extension Cover ₹25,000:
Medical extension of ₹25,000 over and above the Basic WC cover for minor to moderate work-related injuries. This variant is suited for industries where many small injuries occur (abrasions, minor fractures, burns from small incidents) and the employer wants to cover immediate treatment costs for these without the full medical add-on.
Add-On Options:
• Medical Extension Add-On (up to ₹1 lakh+): Enhanced medical coverage for more serious injury treatment
• Occupational Diseases Cover: Brings occupational illnesses (silicosis, asbestosis, chemical exposure diseases, industrial deafness) into coverage — essential for mining, chemical, textile, and high-exposure industries
• Terrorism Cover: Covers injuries from acts of terrorism or violent employee behaviour — relevant for large-workforce industries
WC policy premium is calculated based on the specific risk profile of the employer's workforce:
Primary premium drivers:
• Trade category / nature of work: The most important factor — construction workers carry much higher injury risk than office employees. Each trade category has a specific premium rate (expressed as a percentage of wages or per capita amount). Riskier trades (mining, chemical plants, high-rise construction) attract much higher rates than lower-risk activities (clerical support, light assembly). Insurers cover multiple trade categories including construction, manufacturing, mining, chemical workers, electrical engineers, metal workers, painters, and more.
• Number of workers: More workers = proportionally more premium, but large groups may attract volume discounts. Minimum premium applies even for very small groups.
• Monthly wages: Higher wages = higher compensation obligation = higher premium. Wages are typically declared by category.
• Policy tenure: Minimum 1 month, maximum 12 months. Most employers purchase annual policies. Shorter tenures are available for project-based or seasonal work.
• Add-ons selected: Medical cover, occupational diseases, and terrorism add-ons each increase premium.
Starting from ₹590:
the insurer WC policies start from ₹590 — making WC insurance accessible even for small employers with a few workers. The actual premium for any employer depends on the factors above. Probitas can provide a competitive WC quote for any workforce configuration within 24 hours. Call 022 4302 0000.
Which Employers & Industries Need WC Policy Under EC Act 1923
Any employer whose workers fall under the Employees' Compensation Act 1923 — particularly Schedule II industries involving manual, technical, or operational work — is legally required to ensure compensation for work-related injuries. WC policy is the standard mechanism to fulfil this obligation.
How to Report & Settle a WC Claim
WC claims must be handled promptly and in strict compliance with the EC Act timelines. The employer's role is to notify the insurer immediately, support the injured worker's medical care, and submit documentation within the prescribed deadlines.
The moment a workplace accident occurs:
Immediate employer obligations:
• Ensure the injured worker receives immediate medical attention — first aid on-site, followed by hospitalisation if required. The employer's first obligation is the worker's physical welfare.
• Document the accident immediately — time, location, circumstances, witnesses, machinery or equipment involved, nature of injuries observed
• Notify your supervisor / safety officer and trigger the company's accident reporting protocol
Insurer notification:
• Give written notice to the insurer (through Probitas) within 7 days of the accident occurrence
• For fatal accidents — notification must be within 7 days as required by the EC Act, and also to the Commissioner of Employees' Compensation in the relevant jurisdiction
• Call Probitas on 022 4302 0000 for immediate claim guidance
Do not delay notification: Late notification — even by a few days — can jeopardise coverage. The 7-day deadline is firm. If there is any doubt about whether an incident will result in a claim, notify immediately anyway — notification costs nothing but protects your coverage position.
After initial notification, submit the formal claim within 30 days of the date of actual loss:
Documents for Death Claims:
• Duly filled claim form
• Original death certificate
• Post-mortem report (original or attested copy)
• Medical records if the worker was hospitalised before death
• FIR (attested copy) — for accident-related deaths
• Spot Panchanama and Police Inquest Report (if applicable)
• KYC documents of the deceased employee and nominee (Aadhaar, PAN, Passport)
• Legal heir certificate or succession certificate (for payment to legal dependents)
Documents for Disability Claims:
• Duly filled claim form
• Doctor's report on the nature and extent of injury
• Disability Certificate issued by a certified medical practitioner (original)
• Medical reports including diagnostic and investigation results
• FIR (attested copy) if applicable
• Spot Panchanama and Police Inquest Report if applicable
• KYC documents of the injured worker (Aadhaar, PAN, Passport)
• Wage records showing the worker's monthly wages (for compensation calculation)
the insurer reviews the submitted documents and proceeds to settle the claim:
Claim assessment:
• Verifies that the injury occurred during and arising from employment (the "course of employment" test)
• Reviews the worker's wage records to calculate the statutory compensation
• For disability claims — may require independent medical assessment to confirm the nature and degree of permanent disability
• Reviews medical bills for reimbursement (if medical cover is included)
Settlement process:
• Target settlement: within 30 days of submission of all required documents
• Compensation claims under the EC Act are ultimately adjudicated by the Commissioner of Employees' Compensation (in the relevant jurisdiction) — the final compensation award is made by the Commissioner and the insurer pays the awarded amount
• For uncontested claims with clear documentation, settlement can be faster
• For contested claims or complex disability assessments, the Commissioner's proceedings may take 3–12 months
Probitas claim support: Probitas provides active claim management support throughout the WC claim process — coordinating with the insurer, supporting document compilation, and managing Commissioner proceedings where required. For any WC claim support, call 022 4302 0000.
What WC Policy Does NOT Cover
WC policies have specific exclusions that employers must understand to avoid unexpected coverage gaps.
Injuries caused by the worker's own misconduct — working under the influence of alcohol or drugs, wilfully ignoring safety protocols, deliberately removing or disabling safety devices, or intentional self-harm — are excluded. The policy covers workplace accidents, not worker-caused misconduct.
Illnesses caused by prolonged hazardous workplace exposure — silicosis, asbestosis, byssinosis, occupational deafness, chemical-induced diseases — are excluded under the standard WC policy. The Occupational Diseases Add-On specifically brings these conditions into coverage. Without this add-on, mining, chemical, and textile employers have a significant coverage gap.
Accidents that occur outside the workplace and outside the scope of employment duties are not covered. If a worker is injured during personal activities (not assigned by the employer), during personal travel, or during activities unrelated to their employment, the WC policy does not respond. Commuting accidents (to/from work) are generally excluded unless the employer provided the transport.
Injuries to workers employed by a contractor or sub-contractor of the insured employer are excluded unless specifically included in the WC policy schedule. Principal employers who deploy contract labour must specifically arrange for contractor worker coverage or ensure the contractor holds their own adequate WC policy.
Injuries causing temporary disablement for 3 days or less are not compensable under the EC Act and therefore not covered. Minor injuries that allow the worker to return to work within 3 days do not qualify for WC compensation — though medical treatment costs may be covered under the medical extension add-on.
Workers covered under the Employees' State Insurance (ESI) Act are NOT eligible for compensation under the EC Act (per Section 53 of the ESI Act — ESI is the exclusive remedy for ESI-covered workers). A WC policy does not cover ESI-eligible workers — the employer's obligation for those workers is met through ESI contributions, not WC policy.
Injuries arising from war, enemy attacks, civil war, rebellion, or military actions are excluded. Terrorism-related injuries are excluded from the base policy — the Terrorism Cover add-on specifically brings terrorism and violent labour-dispute injuries within coverage.
Penalties and interest imposed on the employer under the EC Act or any other law (for delayed payment, procedural non-compliance, or default) are not covered by the WC policy. The policy covers the compensation amounts themselves — not additional penalties the employer may face for non-compliance with the Act's procedural requirements.
This is a summary of key exclusions. The complete exclusion list is in the WC policy document. Coverage terms, exclusions, and applicable industry categories vary by policy variant and trade category. Employers in high-risk industries (mining, chemicals, large construction) should review the policy wording carefully with Probitas to ensure full coverage of their workforce risk. Probitas Insurance Brokers Pvt. Ltd. · IRDAI Lic. No. 528 · 022 4302 0000.
Workmen Compensation Insurance Questions
Get Your Workmen Compensation Insurance Quote
WC premium depends on trade category, number of workers, wages, and add-ons. Share your details and Probitas will provide a competitive the insurer WC quote within 24 hours.
By submitting you agree to our Privacy Policy and Terms & Conditions. WC Policy is issued under the Employees’ Compensation Act 1923 and its 2010 amendments. Coverage terms, exclusions, premium, and applicable industries vary by policy. ESI-covered workers are not eligible for WC policy benefits. Premium from ₹590 based on minimum-risk configurations. Probitas Insurance Brokers Pvt. Ltd. · IRDAI Lic. No. 528.