Introduction

The health and safety of employees must be a priority for every organisation. With the pandemic, the focus on health is even more prominent. Employees understand their well-being and thus choose organisations that have effective employee wellness plans. As per a survey, 374 million work-related accidents occur each year. Now, accidents can be mentally as well as financially draining. Hence, one benefit employees look for is Group Accident Insurance. In 2021, insurance companies will cover over 1 billion people with accident insurance. Now, these are optional for each organisation. However, they offer a range of benefits, including employee loyalty and higher productivity. Hence, it’s better to buy one.

However, accident insurance is compulsory for some organisations, where the nature of work is hazardous to employees’ health. Hence, the government has mandated these companies to have a Workmen compensation policy. Failing to do so may result in penalties.

Both group personal accident insurance and Workmen insurance protect employees from the financial strain caused due to accidents and injuries.

So, how do you differentiate between them?

This article will explain the meaning and the difference between the two types of accident insurance.

Group Accident Insurance Policy: What is it?

A Group Accident Insurance plan is a financial cover given by employers to their employees in the event of accidents. The financial protection is valid on accidental death, hospitalisation expenses, road ambulance charges, transportation costs of mortal remains, and more. However, it excludes minor injuries, natural death, pregnancy, or injuries sustained due to adventurous sports, wartime activities, and even intoxication. The employer pays the premium in this policy. Further, all employees can avail the benefits of this policy without any pre-medical checkups.

The Workmen compensation policy: What is it?

The Ministry of Labour and Employment in India introduced the Workmen Compensation Act in 1923. Its Social security division manages these policies in coordination with the State governments. As per the policy, if the employee faces injuries, disability, or death, the company must pay compensation to the said employee or their nominee. This Act is mandatory and applicable to only specific companies.

Differences between Workmen’s compensation and Group Personal Accident policy

S.no Particulars Workmen Compensation Insurance Group Personal Accident Insurance
1 Does the law require this? The Workmen’s compensation policy is mandatory in India under the Workmen Compensation Act,1923. No, the Group Personal Accident policy is not mandatory. However, it is advisable to have one.
2 Which companies must employ this insurance? Under the Workmen Compensation Act, the policy is mandatory for the following companies if they employ more than 20 workers:

 

  • Manufacturing companies
  • Mining companies
  • Construction companies
  • Transport undertaking
  • Factories
  • Plantation
  • Mechanically propelled vehicles
  • Railway
Since this policy is not mandatory, any company can buy this insurance for their employees.
3 Does it include all employees? Only the employer or contractor employees, who match the definition of workmen under the Act, are included. The Act clearly defines “Workmen” under Section II of the Workmen Compensation Act. This policy includes all the employees who are on the job.
4 Does it include injury outside the workplace? This policy offers compensation to the employees or their families only if they sustain injuries, disability, or death at the workplace.

No compensation is payable if the accidents occur outside the workplace.

Under Accident Insurance, the employees or their families are eligible for compensation for all expenses, regardless of whether the accident happened at or outside the workplace.
5 How is the compensation calculated? The compensation is dependent on the following factors:

  • The age of the Workman
  • Nature of the injury
  • Average monthly wages or salaries paid to him

 

The Act specifies the minimum amount, tenures, and any extra expenses depending on the injury. Like in the case of the employee’s death, the employer is liable to compensate for the funeral expenses.

The benefits vary with each Insurance company. As an example, under the Plum Group Accident plan, you get:

 

  • Accidental death-

100% lumpsum amount

  • Medical expenses- 10% of the sum assured
  • Accident coverage – Rs25 lakhs
  • Education welfare fund- Rs10,000, per dependent child
  • Transportation of the mortal remains cover- 

Upto Rs5000

6 What are the inclusions in the policy? This policy covers the following benefits:

  • Accidents resulting in death.
  • Injuries to workmen on duty.
  • Accidents resulting in disability, whether Total or Partial.
  • Contracting occupational illness as specified under the Workmen Compensation Act,1961.
Here are some common benefits of an Accident plan.

  • Accidental Death
  • Disability, Partial or Total
  • Hospitalisation Expenses
  • Road Ambulance expenses
  • Bone Safety protection
  • Transportation costs of mortal remains
  • Child care benefit
7 Are there any exclusions in the insurance policy? Following are some exclusions:

  • Wartime activities, injuries, or diseases
  • Intentional acts, misconduct, self-inflicted injuries.
  • Injuries not recognised and diseases specified under Part C of the Act.
  • Voluntary intoxication due to alcohol or drugs
  • Injuries not fatal or resulting in partial disability, after 3 days.
Following are some exclusions:

  • Dangerous sports or Wartime activities
  • Pregnancy, abortion
  • Voluntary intoxication
  • Self-harm activities
  • Existing disabilities and mental disorders
  • Criminal activities injuries
  • Sexually transmitted diseases

In a nutshell

Taking care of an employee’s health promotes employee retention and productivity. As a result of the government’s online Digital Health ID Card initiative, employees can even get treatment when travelling for work. Following that, they can also claim reimbursement. It is possible to add additional coverage to Group Accident Insurance plans like Term Insurance or Health Insurance. Plum Insurance can help you tailor the Insurance plan according to your employee’s needs with the guidance of experts.