Workmen’s Compensation vs Employer’s Liability Insurance: Know the Difference

Anyone who owns a business should ensure their company is adequately protected. Choosing the right insurance policy is a pivotal business decision. Workers compensation insurance and employer's liability insurance are often used interchangeably, but there are differences between the two types of insurance. Depending on the industry you are in and the type of business you run, you will need different policies. We have specialised analysts and insurance experts at Raghnall who take the time to comprehend your business and curate workmen’s compensation coverage that is appropriate for your requirements. 

Given that the two of these policies are created in an identical way, it is natural for people to get confused between them. To understand the same better, we distinguish between worker's compensation and employer liability insurance in this section.

Protecting Employees: Workers’ Compensation Insurance

Workers' compensation insurance is a type of business insurance coverage that is also known as employee compensation insurance. It offers a safety net for both companies and employees when workplace accidents happen. Employees who suffer work-related injuries are provided with financial security. All businesses in India are required to obtain this insurance if they have more than 20 employees. There may be significant penalties for non-compliance, ranging from fines to criminal charges in the most extreme cases.

What Is Covered Under Workers’ Compensation?

1. Workers' compensation insurance pays for the expense of immediate medical care for workplace injuries, including ambulance, emergency visits, surgical operations, and other medical expenditures. There is also coverage for ongoing treatment, including prescription medicine and physical therapy.
2. An employee may be unable to return to work for days, weeks, or even months following a major accident. Part of the wages lost while an employee is healing from a job-related injury or illness is covered by workers' compensation.
3. Workers' compensation covers funeral expenses and provides support for the deceased person's family members when a work-related occurrence leads to death.

Employer's liability insurance is frequently covered by workers' compensation insurance. Employers are protected from lawsuits resulting from workplace injuries by this kind of insurance.

Protecting Employers: Employer’s Liability Insurance

Employer's liability insurance is essentially a policy that covers workplace injuries, illnesses, and fatalities. The safety of employees while they are at work and in the workplace is someone's legal responsibility as an employer. It protects employers financially in case an employee decides to sue the employer for a work-related accident. Also, it can cover legal costs paid by the employer, regardless of whether the employer is liable. In addition to employer’s liability insurance, Raghnall also offers D&O insurance from top insurance companies in the country, which protects the directors and officers of a company from legal claims that may arise from decisions and actions taken while serving their duty.

What Is Covered Under Employers’ Liability?

1. If the employer is sued by a third party (say for instance, a machine manufacturer who was sued by an employee for a workplace accident they suffered due to a piece of machinery at the workplace). The third party may in turn pin the blame on you for your negligence.
2. If the employee happens to die, or get significant injuries that renders them unfit for employment, then their family members are entitled to get additional compensation from the employer.
3. A worker has an injury while utilising one of the employer's machinery, and later sues the business as both an employer and a manufacturer.
4. A non-employee who is adversely affected by an employee's work-related illness or injury, such as a family member who develops health issues while providing care for an injured worker, can file this claim.

These are the differences between worker’s compensation insurance and employer liability insurance. But both cover work-related injuries or illnesses in different aspects. Raghnall, a leading insurance broker in Mumbai and risk advisor, offers customised coverage for workmen’s compensation insurance, effectively catering to business needs and providing the most comprehensive coverage at the best prices.