What Is Indemnity In Workers Compensation Insurance?


In the insurance field, the principle of indemnity applies to restore the insured to his same financial condition as he was before the loss incurred. In case of workers compensation, an indemnity claim happens when a worker/employee on the job becomes injured and is unable to work till he becomes fit to get back to work, in a permanent and stable condition. Until that time, the worker will receive medical treatment and wage support. The ultimate objective is to pay a total sum to the worker and make good his loss of money related to the injury.

Meaning of Indemnity in Workers Compensation

Also, in workers compensation policy, indemnity means to compensate workmen for the lost income/wages and thus keep the employee financially stable. As per the worker compensation insurance, a worker/employee is entitled to medical coverage cost, lost wages value, permanent disability compensation, death benefits to the family and vocational rehabilitation.

However, the total worker compensation amount is subject to a limit as per W. C. Amendment Act 2000. The total worker compensation amount is based on the WC Act and is commonly subject to the age, the nature of the disability and the up-to-date salary of the worker. The fixed worker compensation limit is Rs 4,57,080 for fatal injury and Rs 5,48,496 for permanent total disablement, while temporary disablement amounts to half monthly compensation and the state of permanent partial disablement as per the nature of incapacity.

Also, workers compensation indemnity payments are subject to state rules. Each state has an appointed worker compensation board which will list the schedule of benefits and attached to it, a worker’s compensation indemnity amount. It also lists the minimum and maximum amount of indemnity under the worker’s compensation insurance policy. The worker compensation limits are strictly adhered to.

In addition, the final amount to be determined in case of worker compensation indemnity payments is subject to the exact nature of the disability. It is purely based on the extent of the disability. The final percentage of indemnity is arrived at based on the extent of disability. It can be 100 percent for total permanent disability and 50 percent for partial disability.

The TTD and TPD in Workers Compensation

The temporary benefits category includes temporary total disability (TTD) and temporary partial disability (TPD). Permanent disability benefits include permanent total disability and permanent partial disability.

There are additional worker compensation indemnity benefits paid in some states. It is called supplemental earning benefits. In this case, a worker may be able to return to work but he cannot earn the same compensation as before his injury. It is a uniform principal followed across the states which choose to implement it, the amount of indemnity may, however, differ.

Regarding the payment of worker compensation amount, a waiting period of 3-7 days is imposed on the organisation before an indemnity request can be initiated. Upon authorisation, the payments can be released on a weekly or on a monthly basis.

Like aforementioned, the worker compensation indemnity amount is payable on the death of a worker to his family, only if it is a work-related accident or injury. It is usually a lump sum amount payment.

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