Labour Insurance in India: Schemes, Cover & Claims [2026]

Overview

Labour insurance, commonly known as Workmen's Compensation Insurance, is an insurance policy that protects employers against financial liabilities arising from work-related injuries, occupational diseases, or death of covered workers. However, there is no separate category called “Labour Insurance” regulated by IRDAI or a single government scheme.

Key Features and Coverage

Statutory Compliance: Helps employers meet their compensation liabilities under applicable employee compensation laws and regulations.
Death Benefit: Provides financial compensation to the eligible dependents of a worker who dies due to a covered workplace accident or occupational disease.
Disability Compensation: Covers eligible compensation for temporary disability, permanent partial disability, or permanent total disability resulting from a covered workplace injury.

Who Needs Labour Insurance?

High-Risk Industries: Particularly relevant for businesses operating in construction, manufacturing, and other physically demanding sectors.
Different Worker Categories: Coverage can extend to permanent, temporary, and contract workers when they are properly declared and covered under the policy.

What happens if a worker gets injured on the job and suddenly can’t earn the way they used to?

That’s where labour insurance can help. Depending on the type of cover, it can provide financial support for work-related injuries, disabilities, occupational illnesses, and even death.

But there is no single labour insurance policy, and the rules can get confusing quickly. Different workers may be covered under different schemes, with different eligibility criteria, benefits, and claim processes.

So, in this guide, we’ll break down what labour insurance means in India, the different types of protection available, who can qualify, what benefits they offer, and where the coverage may still fall short.

What Is Labour Insurance in India?

“Labour Insurance” is not a separate insurance category recognized by IRDAI or a single government scheme. The term is commonly used to describe different forms of insurance for labour, such as Employees’ State Insurance (ESI), Employee’s Compensation Insurance (ECI), construction worker welfare benefits, and accident or life insurance schemes available to eligible workers.

ESI: Provides medical and cash benefits to eligible employees and their dependents.
ECI: Covers an employer’s liability for qualifying work-related injuries, occupational diseases, disability, or death.
Construction Worker Welfare Boards: Provide separate welfare benefits to eligible, registered construction workers.

Note: For employers, Employee’s Compensation Insurance (ECI) can help transfer eligible statutory liabilities arising from workplace injuries, occupational diseases, disability, or death. Since November 21, 2025, these liabilities have been governed by the Employee’s Compensation provisions under Chapter VII of the Code on Social Security, 2020, which subsumed the earlier Employees’ Compensation Act, 1923.

Importantly, these provisions generally apply where the Code's ESI provisions do not apply. Therefore, a private Employee’s Compensation policy should not be treated as a substitute for mandatory ESI coverage.

However, the legal obligation to provide eligible compensation does not automatically mean an employer must purchase an insurance policy. Employers may use insurance to manage covered compensation liabilities, but the underlying statutory responsibility remains governed by the applicable law.

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Types of Labour Insurance: ESI, Workmen's Compensation and Labour Card Schemes

Scheme	Purpose	Main Risk Covered	Who Pays/Funds It
ESI	Statutory social insurance providing medical and cash benefits to eligible employees and their families.	Hospitalization, Outpatient Department (OPD), sickness, maternity, employment injury, disability, and employment-injury death.	Funded through contributions from eligible employers and employees under the ESIC framework.
Employees’ Compensation	Employer’s legal liability to compensate employees for covered work-related injuries, diseases, disability, or death.	Work-related accidents, occupational diseases, temporary or permanent disability, and death.	The employer bears the compensation liability. Insurance can transfer eligible liability to an insurer for a premium.
Building and Other Construction Workers (BOCW)/Labour Card	State-level welfare support for eligible construction workers registered under the Building and Other Construction Workers framework.	Accident and death support, disability, maternity, education, pensions, healthcare, and other state-specific benefits.	Funded through the State BOCW Welfare Fund, primarily through employer cess and other prescribed sources.

Take Note: An e-Shram Card is not automatic insurance. It is a national database and welfare-access platform for unorganized workers. It covers categories such as construction workers, migrant workers, domestic workers, and agricultural workers.

Registration can help workers access eligible social security schemes, but the benefits they receive depend on each scheme's eligibility criteria and rules.

According to the Press Information Bureau (PIB), as of August 25, 2026, over 31.89 crore unorganized workers had registered on the e-Shram portal.

What Is an ESIC Number?

An ESIC number is a unique 10-digit identification number assigned to an insured person under India’s Employees’ State Insurance (ESI) scheme. It helps ESIC identify the worker and maintain their insurance and benefit records throughout their employment.

Who Is Eligible and How to Register for Labour Insurance?

Eligibility for ESI Scheme: Under the current framework, ESI generally applies to establishments with 10 or more employees. Eligible employees do not purchase ESI independently, unlike private insurance. The employer handles registration and enrolls eligible employees under the scheme.
How to Register for ESI: The employer submits the employee’s details, family information, residence, and selected dispensary through the ESI portal. The employee receives a unique ESI Insurance Number, which remains valid for life, including when changing employers. If a worker moves from Factory A to Factory B, they should provide their existing ESI number to the new employer rather than obtain a new one.

Private Insurance Plans

Eligibility: Unlike statutory schemes such as ESI, private plans like ICICI Lombard Workmen Compensation Policy generally do not have a worker-level income ceiling or a fixed minimum employee count. Coverage can extend to manual, construction, electrical, warehouse, and service-sector workers, subject to policy terms.
How to Register: The employer or contractor purchases the policy by providing business details, risk location, worker categories, wage information, contractor details, claims history, and required add-ons. Insurers such as ICICI Lombard offer online purchase and business insurance assistance. The policy schedule then records the covered workers, locations, work activities, declared wages, limits, and selected add-ons.

Benefits, Cover Limits and How to File a Claim for Labour Insurance

Benefits of Government-Backed Schemes Like ESI

Medical Benefits

From the first day of insurable employment, ESI provides access to medical treatment through authorized dispensaries and hospitals, covering primary, secondary, and tertiary care.

Sickness Benefit

Eligible employees receive 70% of average daily wages for up to 91 days. Extended sickness benefit can provide 80% for up to 730 days for specified diseases.

Maternity Benefit

ESI provides maternity cash benefits at 100% of average daily wages, subject to applicable contribution and eligibility conditions.

Disablement Benefit

Temporary disablement provides 90% of wages during incapacity. Permanent disablement benefits depend on the assessed loss of earning capacity.

Dependents and Funeral Benefits

Eligible dependents can receive 90% of wages as a periodic pension following employment-injury death. Funeral expenses of ₹15,000 are also payable, subject to applicable conditions.

Take Note: Under the current ESIC wage eligibility rules, the wage ceiling for coverage is ₹21,000 per month. For persons with disabilities, the ceiling is ₹25,000 per month. These limits have been effective since January 1, 2017, subject to applicable ESIC rules.

How to File an ESI Claim?

Medical Treatment: Use your ESI Insurance Number or e-Pehchan Card to access treatment through your allotted ESI medical facility or an authorized referral network.
Cash Benefits: Eligible insured persons can submit claims for sickness, extended sickness, maternity, and temporary disablement benefits through the IP Portal. You can also track claim status online.
Work-Related Accidents: Inform your employer immediately after an accident. The employer must report qualifying workplace accidents to ESIC through the applicable process, including Accident Report Form 12.
Funeral Expenses: Eligible claimants can apply using Form 22, along with the required proof of death and documents establishing their eligibility.

Benefits of Private Plans From Insurers

Work-Related Death: Provides compensation to eligible dependents when a covered employee dies due to a work-related accident or occupational cause.
Permanent Total Disablement: Covers statutory compensation payable when a covered workplace injury results in permanent total disablement.
Permanent Partial Disablement: Provides compensation based on the assessed loss of earning capacity caused by a covered permanent partial disability.
Temporary Disablement: Provides periodic compensation for eligible temporary disablement resulting from a covered workplace injury.
Legal Defense Costs: Can cover eligible legal expenses incurred in defending a compensation claim, where covered and incurred with the insurer’s consent.
Medical Expenses: Medical expenses are not automatically included. Medical Expenses Cover is available as an optional add-on.
Occupational Diseases: Occupational disease coverage is available through an optional add-on, subject to the applicable policy terms and conditions.

Claim Process

Raise the Claim

Notify the insurer about the incident through its prescribed claim channels.

Survey and Assessment

The insurer may appoint a surveyor to assess the loss or incident and determine the documents required.

Submit Documents

Provide the requested documents and information through the insurer’s designated process.

Claim Verification

The insurer reviews the submitted documents and assessment report before deciding on the claim.

Settlement

Once the assessment is complete, the insurer communicates the settlement amount and completes the required formalities.

Claim Payment

After approval and completion of KYC or other requirements, the insurer pays the approved claim amount to the policyholder.

Labour Insurance vs. Private Health and Term Insurance: Do You Still Need Cover?

Labour insurance can provide important financial protection for workers and their families. However, these benefits are usually linked to specific schemes, eligibility rules, or employment conditions. They may not cover every healthcare expense or provide enough financial support after a worker’s death.

Private health and term insurance can fill these gaps. Health insurance can offer broader medical protection, while term insurance can provide a larger death benefit to protect dependents and replace lost income.

Feature	Employee Compensation	ESI	Private Health Insurance	Personal Term Insurance
Bought By	Employer purchases cover to meet employee compensation obligations	Employer and employee contribute under the statutory ESI system	Worker or individual buys the policy directly	Worker or individual buys the policy directly
Covers Ordinary Illness	Generally does not cover ordinary illnesses unrelated to work	Covers medical care for eligible insured persons and dependents	Covers hospitalization and other eligible medical expenses	Not a medical insurance policy and does not pay treatment expenses
Work Accident	Covers eligible work-related injuries and compensation liabilities	Covers employment injuries and related medical benefits if ESI applies	Covers any hospitalizations arising due to accidents from day 1	Pays the death benefit if the insured dies due to the accident or any cause, and some policies offer optional riders for lump sum payout in case of an accident resulting in disability
Disability Compensation	Covers eligible work-related disability under employee compensation rules	Provides benefits for employment-related disablement under ESI	Generally does not replace income after disability	Depends on whether an eligible disability rider is included
Death From Workplace Accident	Pays compensation for eligible work-related employee deaths	Provides dependents' benefits for eligible employment injury deaths	Does not provide a separate life insurance payout	Pays the death benefit if the policy conditions are met
Continues After Leaving Employer	Usually ends when the employment relationship or employer policy ends	Depends on continued eligibility under the ESI framework	Can continue as long as the policy is renewed	Can continue independently as long as premiums are paid
Worker Controls Cover	No, the employer arranges and controls the policy	No, coverage operates under statutory eligibility rules	Yes, the individual selects the policy and coverage	Yes, the individual selects the insurer, cover, and policy term

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Conclusion

Labour insurance can provide valuable protection against workplace accidents, employment injuries, and other risks covered under specific worker welfare schemes. However, it should not be treated as a complete substitute for personal insurance. The extent of protection depends on the scheme, employment status, and eligibility rules.

For broader financial protection, workers can consider the best health insurance plans for medical expenses and the best term insurance plans for income replacement and family protection. These covers remain useful beyond the workplace.

However, if eligibility or higher premiums are a concern, which is often the case for this population, consider standardized options such as Saral Jeevan Bima and Arogya Sanjeevani.

Disclosure: Ditto currently offers advisory services only for health insurance and term life insurance. We do not advise on the government schemes or other labour insurance products discussed in this article. This article is intended for educational purposes only and should not be treated as insurance advice or a recommendation to purchase any specific product or scheme.

Frequently Asked Questions

How much medical cover does a worker get under ESI in India?

ESI does not work like a private health policy with a fixed sum insured. Eligible insured persons and their families can receive full medical care through the ESI system, subject to scheme rules and eligibility. ESIC information materials state there is no upper ceiling on treatment expenditure for individual cases, covering outpatient, inpatient, specialist, and other prescribed care.

What is the ₹110 labour insurance policy people search for, and what does it actually cover?

The often-mentioned ₹110 labour insurance policy appears in online articles as a low-cost worker welfare scheme, as a current pan-India Central Government insurance product from an official government source. Treat such claims cautiously. The actual coverage, insurer, eligibility, premium, and validity should be checked with the relevant State Labour Department or welfare board.

Can a construction worker with a labour card claim insurance benefits from the state welfare board?

Yes, an eligible construction worker registered with the State BOCW Welfare Board can apply for benefits from that board, subject to the applicable state scheme and registration conditions. Benefits can include accident or death assistance, medical support, education, and other welfare measures. The exact labour card insurance benefit amount, eligibility, and claim process vary across states and schemes.

Is an employer legally required to insure daily wage workers in India?

No, there is no universal rule requiring every employer to buy a private insurance policy for every daily wage worker. However, statutory compensation liabilities can apply when a covered work-related injury, occupational disease, disability, or death occurs. Employers may use Employees’ Compensation insurance to transfer eligible liabilities to an insurer, subject to applicable law and policy terms.

How does a worker's family file a death claim under PMJJBY or a labour welfare scheme?

For PMJJBY, the nominee or eligible claimant submits the prescribed claim form through the member’s bank/post office, along with proof of death and identity documents. The official claim form provides separate documentation requirements for accidental death. Labour welfare schemes follow their own state or scheme-specific procedures, so the family should approach the relevant bank, welfare board, or designated authority.

Does ESIC cover treatment at private hospitals outside the ESIC network?

ESIC does not generally function like a private indemnity policy that lets an insured person freely choose any private hospital. Treatment is primarily provided through ESI facilities, while private or other hospitals may be used through authorized referrals, empanelment, or specific emergency reimbursement provisions. Unauthorized elective treatment outside the network may not qualify for reimbursement.

How can a construction worker register with the Welfare Board?

A construction worker can generally register with the applicable Building and Other Construction Workers’ Welfare Board if they are 18 to 60 years old and have worked in construction for at least 90 days during the previous 12 months. The worker must apply through the process prescribed by the relevant state Welfare Board. Application, document verification, fees, and renewal requirements can vary by state.

How much life insurance does PMJJBY provide?

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) provides ₹2 lakh in life insurance for death from any cause, subject to the scheme's terms and eligibility conditions. The annual premium is ₹436, and individuals can enroll between the ages of 18 and 50. New entrants face a 30-day lien period for non-accidental death. If a worker also has Pradhan Mantri Suraksha Bima Yojana (PMSBY), a qualifying accidental death can result in ₹2 lakh from each scheme, giving a combined benefit of ₹4 lakh. However, these schemes are low-cost financial protection layers and may not be enough to replace a breadwinner's income.

What is the Antyodaya Shramik Suraksha Yojana?

The Antyodaya Shramik Suraksha Yojana is an affordable accident insurance scheme designed for workers in the unorganized sector. It was launched as a pilot in July 2023 in Kheda, Gujarat. The scheme is available to eligible workers registered on the e-Shram portal through India Post Payments Bank (IPPB), the Department of Posts, and the Ministry of Labour and Employment. It provides financial protection against specified accidental events for eligible workers and their families, subject to the scheme's terms and conditions. The scheme is offered via IPPB and issued by partner insurers.

Last updated on: 2 Oct, 2026

Labour Insurance in India: Schemes and Cover