Are Drivers Covered Enough by Vehicle Insurance or Do They Need a WC Policy Too?

Clarification on WC Policy for Drivers in Factory Premises

I have a small doubt. If any contractor is working under a factory and has hired some workers, including drivers for transport purposes inside the factory premises, the WC policy is compulsory for all the workers working under the contractor inside the factory premises. However, some contractors only have a WC policy for the workers, excluding the driver category. They are requesting the factory management to allow their drivers (with vehicles) without a WC policy because they are all covered under the vehicle insurance policy.

Questions Regarding Insurance Policies

- Is it correct not to take a separate WC policy for the drivers?
- Are drivers generally covered under the vehicle insurance policy?
- Is the vehicle insurance policy better than the WC policy?
- If we allow the drivers by considering their risk coverage under the vehicle insurance policy, would it be correct as per statutory norms?

Please suggest.

Regards

No, you need to take a Workers' Compensation (WC) Policy for drivers working inside the factory. Vehicle insurance policies become operational only on roads and in other places when any untoward incident happens to the vehicle or driver, but not within the factory premises.

Inside the factory premises, only the factory inspectorate has the authority for any accidents that happen; they may investigate and book the occupier for unsafe activity. In the case of a vehicle insurance policy, you need an FIR to register a claim with the insurance company, which is not possible for accidents that happen inside the premises of a factory. Hence, we would suggest you cover drivers under a Workers' Compensation policy.

Insurance Requirements in India

Let me first tell you that in India, no insurance is compulsory except vehicle insurance.

When there is an employer-employee relationship and the employment is in a factory, mine, plantation, transport establishment, construction, railway, ship, circus, and in other hazardous occupations and employments specified in Schedule II of the EC Act, and the employee is not coverable by the ESI Act, the EC (erstwhile WC) Act is applicable to such employees.

As per the EC Act, the employer is liable to the workmen and/or his/her dependents for certain relief or compensation in case of an accident to the employee arising out of and in the course of employment and causing either death or disablement—partial or total.

There is no criteria of employment inside the factory premises or outside the factory premises.

Your liability under the EC Act is absorbed by the Insurance Company if you cover your employees under the EC Policy.

Vehicle Insurance generally covers accidental loss or damage to the vehicle and third party.

Hope you will get answers from my inputs correctly.

Regards

Dear Member,

As mentioned by Keshav, drivers should be covered under ESIC. If ESIC is not applicable in that area, then they should be covered under the Employee Compensation Act.

Hiring Workers and ESI Act Compliance

As you have mentioned in your query, you have been hiring some workers, including drivers for transport purposes inside the factory premises. The provisions of the ESI Act have been extended to companies engaged in the "Road motor transport" business. It is always advisable to hire those workers from a reputed transport company. The advantage of such a step is that all the liabilities relating to the payment of compensation are met by the ESI Corporation. In this regard, Section 53 of the ESI Act, 1948 is relevant, which puts a bar against receiving or recovering compensation or damages under any other law.

Regards,
BS Kalsi

Check if ESI is already applicable there. If your organization is notified and you are complying with ESI provisions, then WC is not required as ESI benefits are mandatory and better than WC.

Regards,
RDS Tadav