Public liability insurance act

Faizan | UD/900 | SPA – UD | 2nd sem | 18.01.21

Public liability insurance act, 1991

• Framed in 1991, having provisions to offer direct assistance to people who are affected by accidents dealing
with handling of hazardous substances by industries, factories, companies, etc.
• Owner has to subscribe to a “public liability insurance policy cover” which insures them against the claims from
third parties (people, victims).
• No-Fault liability is provided, even if it is not the fault of company, it is accountable to pay.
The reason for enactment
Bhopal Gas Tragedy, Dec 1984

• A chemical reaction. At midnight began at the Union Carbide

(India) Limited plant, which resulted in the release of a deadly World’s deadliest
gas methyl isocyanate (MIC) from one of the tanks. industrial disaster
• As a result, the gas cloud slowly plunged and enclosed the
city within its fatal folds.
The government of India reacted with a number of legislative
measures :-
• Environment Protection Act, 1986 – central government gains
the powers to enter, inspect, and close down enterprises that
are previously under inadequate supervision.
• The Factories Act, 1987, and the Hazardous Wastes Act, 1989
for the industries. Source:
India
• Public liability insurance act 1991 – mandatory factory owners CSE/ICMR

to ensure against potential community damages

3,500 10,000 30,000
Death toll Immediate Tonnes
first 3 days deaths (MIC) gas leaked
The provisions
“Owner”
Partners, in a company
Any member, in an association

Duties of the owner

• To take insurance policy before handling of hazardous substances.
• Renew the policy time to time
• Policy cover shall not be less than the paid-up capital (initial investment) of the business and not more
than Rs 50 crore.
• Liability of insurer – Max 5 crore for single accident
Max 15 crore for multiple accident

The environmental relief fund

• Additional provision of fund is made, apart from the insurance, for victims. (united India insurance)
• The owner deposits a sum along with the insurance premium. In case of liability.
The procedure

• Application is sent to collector (district magistrate) by the victim, owner or the authorised representative. Within
5yrs of damage.
• Collector gives notice to both the parties, hearing is held, enquiry is made into claims.
• Funds released by the insurer company to the collector.
• Collector gives funds to the victim.

Application to Notice being Enquiry after Funds sent to Collector gives

collector sent to both hearing is held collector by funds to victim
parties insurer
The claim limits

s.no Particulars liability

1 Medical expenses Max up to ₹12,500
2 Fatal accidents ₹25,000 + medical reimbursements up to
₹12,500
3 permanent total, permanent ₹12,500(medical) , permanent disability -
partial disability ₹25,000
4 Loss of wages – temporary partial fixed monthly relief not exceeding Rs.
disability (victim has been 1,000 per month up to a max of 3 months
hospitalised, period of exceeding 3
days and is above 16 years of age.)
5 damage to private Up to Rs. 6,000
property.
Vizag Gas Leak : Vishakhapatnam
Case example, May 6, 2020

• At night several respiratory problems arose, and almost 13 people

were reported to have died in a very short period of time, and
thousands were hospitalized with serious complications the next
day (upto 5km was affected)
• Styrene gas leak was discovered from LG Polymers India Ltd.
Causing respiratory problems, central nervous system depression,
and several other deadly diseases.
• LG Polymers has two policies - mandatory Public Liability Act policy
AOA (Any One Accident) of Rs 5 crore, and also has an industrial
PLI policy limited to 5 crore – both from New India Assurance.
• The NGT issued the orders under their act, 2010. and smacked a
provisional detriment of Rs 50 crore on LG Polymers India
Tughlakabad gas leak, delhi
Case example, May 6, 2017

• Over 450 girl students were affected due to chemical gas leak
from the Tughlakabad container depot.
• NDRF said a truck carrying 80 cans of chloromethyl for Sonepat
from there.
• Leakage happened due to improper sealing of containers after
being checked.
• NGT, green panel issued notices to MoEF, railway board and DPCC,
to file the replies
• A show cause notice is also issued to container corporation of
india,
Bibliography
• Raghavan, Vikram. “PUBLIC LIABILITY INSURANCE ACT: BREAKING NEW GROUND FOR INDIAN
ENVIRONMENTAL LAW.” Journal of the Indian Law Institute, vol. 39, no. 1, 1997, pp. 96–115. JSTOR,
www.jstor.org/stable/43951681. Accessed 17 Jan. 2021.

• Verma, a., 2020. Overview of Public Liability Insurance Act, 1991. [Blog] Pleaders,
Available at: https://blog.ipleaders.in/overview-public-liability-insurance-
act/#Major_provisions_made_in_the_Public_Liability_Insurance_Act [Accessed 17 January 2021].

• https://www.thehindubusinessline.com/news/national/gas-leak-police-issues-notices-to-firms-
transporting-containers/article9687659.ece?homepage=true

• https://www.outlookindia.com/newsscroll/vizag-gas-leak-brings-back-focus-on-public-liability-
insurance/1826765

• https://www.thenewsminute.com/article/vizag-gas-leak-it-s-time-multiply-compensation-under-public-
liability-insurance-124164