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The Public Liability Insurance Act,

The Public Liability Insurance Act, 1991

The Public Liability Insurance Act, 1991 provides for Liability Insurance for the purpose of providing immediate relief to the persons affected by accidents occurring while handling hazardous substances. With the growth of hazardous industries in India, there is a growing risk from accidents to the workman as well as the innocent public. The Act imposes on the person, who has control over handling any hazardous substance, the liability to give the relief specified in the Act to all the victims of any accident which occurs while handling such substance. It would be the duty of every owner to take necessary insurance policies to discharge his liabilities. Under the Public Liability Insurance Act, all third parties including employees can claim compensation, except such employees who can be termed as workmen under the Workmen's Compensation Act, 1923. The Public Liability Insurance Act, 1991 provides that every owner of a hazardous establishment as defined under the Act needs to take out a compulsory insurance.

The Liability policy is for businesses related to the handling of notified hazardous substances. If an accident even occurs, this insurance policy will ensure immediate financial assistance to the people affected by the accident due to death, injury or damage of property.  Under the Public Liability policy, "Handling" means manufacturing, processing, treatment, packaging, transportation, use, collection, destruction, conversion, offering for sale, transfer or any similar form of dealing with hazardous substance. This policy covers the amount which the insured becomes legally liable to pay as damages to third parties as a result of accidental death, bodily injury, loss or damage to the property belonging to a third party. The legal cost and expenses incurred in defending the case with prior consent of the insurance company are also payable subject to certain terms and conditions.

Under the Public Liability Insurance Act, the total liability is unlimited. However, liability in respect of each claimant is limited to the extent provided as follows:

  • Reimbursement of medical expenses incurred up to a maximum of Rs.12,500/- in each case.
  • For fatal accident, the relief will be Rs.25,000 / person in addition to reimbursement of medical expenses, if any incurred on the victim up to a maximum of Rs.12,500/-
For permanent total or permanent partial disability or other injury or sickness, the relief will be

  • Reimbursement of medical expenses incurred, if any up to a maximum of Rs.12,500 in each case and
Cash relief is on the basis of percentage of disablement as certified by an authorised physician. The relief for total permanent disability will be Rs.25,000/-

For loss of wages due to temporary partial disability which reduces the earning capacity of the victim, there will be a fixed monthly relief not exceeding Rs.1,000 per month up to a maximum of 3 months provided the victim has been hospitalised for a period exceeding 3 days and is above 16 yrs of age. The relief offered for damage to private property depends on the actual damage and is limited to Rs.6,000.

Ref - http://envfor.nic.in/legis/public/public1.html