When it comes to hiring employees there is a lot of risks and the enormous responsibility that business owners need to take care of. They need to be prepared and understand that employees can be injured even during performing mundane tasks. For instance, an employee could hurt their back while just bending over to pick up a delivery package. Keep in mind, workplace injuries can be unpredictable, which makes small business owners responsible for their health, Hence,Workmen’s compensation insurance comes into the picture. Workmen’s compensation insurance is crucial as it transfers the financial risk of a workplace accident to the insurance company. This way, the small business owners can focus on running the business while helping the employees to heal, simultaneously.

Workmen’s compensation meaning& importance

Workmen’s compensation insurance simply protects employers from liability if their employees get injured while functioning at the workplace. It is legal and required in most states. It assists employers to maintain their employee’s health. No worker's compensation can lead to penalties and huge fines. The coverage for Workmen’s compensation is affected by several factors, like need of business, type of business, number of employees, risk exposure as well as the history of workplace accidents.Workmen’s compensation provides protection for employees’ lost wages, medical bills and other expenses if they get injured at the workplace. Be it small, medium or big, all business owners need to ensure their Workmen’s compensation is in place to protect their employees while functioning at the workplace.

Workmen’s compensation insurance coverage

The Workmen’s compensation insurance inclusions are:

  • Medical expenses from accidents at the workplace, like ambulance, emergency room visits, surgical procedures, ongoing caremedication, physical rehabilitation and other medical bills
  • Partial, temporary or permanent disability due to an accident while functioning at the workplace
  • Wages lost while an employee is recovering from an injury at the workplace or occupational illness
  • Death benefits that cover funeral expenses and support for a deceased employee or family member for fatal injuries while accident at the workplace
  • Protection from legal fees, court costs and settlement charges for the employer in case an employee sues for workplace-related injury

The Workmen’s compensation insurance exclusions are:

  • If an employee is injured due to working under influence of alcohol or drugs or does not follow the safety rules of the company
  • Inactive employees on employees on probation cannot claim Workmen’s compensation insurance
  • Replacement workers are not covered under Workmen’s compensation insurance

How to file a claim under Workmen’s compensation insurance?

At the time of any injury, accident or death while functioning at the workplace, the injured employee or his family need to perform the below steps in order to file a claim under Workmen’s compensation insurance;

  • Firstly, inform the factory/ company/ enterprise inspector/ official about the accident
  • Then the insured employee can send a written notice to the insurance company mentioning all details about the accident
  • A trained investigator is sent by the insurance company to cross-check the authenticity of the claim raised
  • Make sure to disclose all the detailed information about the accident to the insurance company
  • Submit the claim form along with all the necessary documentation
  • Subject to the claim, accident and workplace factors, the claim then gets settled

Documentation required for Workmen’s compensation insurance

The documents needed for Workmen’s compensation insurance claims are:

  • Duly filed claim form
  • All medical bills
  • Past records of compensation
  • Medical certificate in case of permanent or temporary disability
  • Memorandum of the agreement for Workmen’s compensation insurance
  • In case of death, the FIR, death certificate, post-mortem report copies and witness statement


Under the workmen compensation act 1923, it became mandatory for employers to pay for their employees’ safety for any work-related injury or disability. It is most applicable at factories, construction sites, mines and plantations where the nature of work is very risky. Workmen's compensation insurance helps employees by protecting them from the financial burden of work-related disabilities or injuries.

FAQs – Frequently asked questions.

Let's take a look at some frequent queries on Understanding the Importance of Workmen's Compensation for Small Business Owners;

Q. Who pays for Workmen’s compensation insurance?

The Workmen’s compensation insurance is paid by the employer only. Every business owner has to ensure Workmen’s compensation insurance for employees working in the company.


Q. How long does claim settlement take?

Generally, if all the details and submission to accident are accurate then under Workmen’s compensation insurance, the employer has to settle the claim within 30 days from the date of claim.

Q. Is Workmen’s compensation insurance same as employee compensation insurance?

Yes, Workmen’s compensation insurance and employee compensation insurance both are terms used for the same type of insurance.

Q. Can Workmen’s compensation insurance be purchased online?

Yes, it is easy and better to purchase Workmen’s compensation insurance online as it gives options to compare and helps make an informed decision.

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