The aspect of liability towards employees under Workmen's Compensation Act and beyond needs clarification. 

Mr. Vijay has an Act Only policy covering his private car. He employs a paid driver. While driving the vehicle, after dropping Mr. Vijay at his office, the vehicle collides with a truck and the driver dies on the spot.

Being an old car, Mr. Vijay had nothing much to lose and that is why he had not taken a Comprehensive Policy. However, the family of the driver lost their bread-winner. 

As an employer, Mr. Vijay is liable to compensate for the driver, since he was driving the vehicle in course of employment. The Motor Vehicles Act, makes it compulsory to insure liabilities under Workmen's Compensation Act. 

Accordingly, the legal heir of the deceased driver filed an application to the Labour Commissioner and an Award of Rs.1,50,000 was passed against the employer. Mr. Vijay, equipped with an Act Policy, approached the insurance company, who in turn satisfied the Award .The legal heir of the driver received the compensation from the Labour Court soon after and everyone was happy. 

The liability for compensation as per the Workmen's Compensation Act, depends on the wages of the employee and his age, and represents mainly the loss of earnings. 
However, other losses representing mental pain and agony for the family, loss of consortium, future expenses on dependents and loss of prospective earnings are not accommodated in this compensation. 

The legal heir of the driver, in the instant case then approached the Motor Accident Claims Tribunal, demanding a compensation of Rs.1,00,000 towards these losses. The Tribunal passed an Award of Rs.50,000, found reasonable as per provisions of Common Law and Fatal Accidents Act. 

Mr. Vijay had an Act Policy which did not cover this liability and he was saddled with the responsibility of satisfying the Court Order. You can imagine the financial burden he had to bear. Had he taken a Comprehensive Policy, covering his driver by payment of a small premium, he would not have to face this difficulty. The insurance company would have paid this additional amount of compensation too.

It is, therefore, always advisable to take a Comprehensive Policy covering these liabilities.