Public Liability Insurance Act Policy

 

Public liability insurance policy is an insurance cover, for liabilities that arise in course of business operations. In short it is liability to the public who come to your premises for the purpose of business. Any third party can claim compensation if they are injured or if their property is damaged. The business owner has to incur financial loss and this also hampers the smooth flow of business. Public liability insurance Act policy is for providing immediate compensation to those affected by the accident. This insurance applies to business owners handling /manufacturing   hazardous substances.

For example, if a stock of goods falls on a customer visiting a shop and he suffers an injury and if the customer claims for injury/damages the business owner is liable. This can be safely insured under a public liability policy.

Similarly, where there is manufacturing /handling of hazardous goods the business owner must compulsorily buy a Public Liability Act policy. This policy is mandatory as per government directives for those handling hazardous goods.

The Bhopal Gas tragedy where lot of lives were lost due to leakage of gas prompted the formulation of an Act to safeguard the interests of innocent victims of such accidents. Public Liability Insurance Act policy was enacted in 1991.

Important definitions of the public liability policy

“Accident” means an accident involving a fortuitous, sudden or unintentional occurrence while handling any hazardous substance resulting in continuous, intermittent or repeated exposure to death of, or injury to any person or damage to any property but does not include an accident by reason only of war or radioactivity.

“Handling” in relation to any hazardous substance means the manufacture, processing, treatment, package, storage, transportation by vehicle, use, collection, destruction, conversion, offering for sale, transfer or the like of such hazardous substance.

“Hazardous Substance” and group means any substance or preparation which is defined as hazardous substance under the Public Liability Insurance Act, 1991 and the Rules framed there under.

 

Who can purchase the public liability policy?

Manufacturing Units- all operations being carried out in the manufacturing complex in one location

Godowns/ warehouse owners handling hazardous substance as defined in the PL Insurance Act, 1991.

Transport operators who transport the hazardous material from one place to another.

How does the policy work?

·        This policy is mandatory only for manufacturers /dealers of hazardous goods.

·        Hazardous goods are listed in the list of hazardous goods as laid down in the PL Act .1991

·        Policy is particularly designed for third-party liability.

Premium is collected from the business owner as per the rate specified for hazardous goods. Equivalent amount of premium is deposited at the policy inception stage itself in the Environment Relief Fund (ERF) account. This ERF account is enumerated in the Act for raising funds for the victims of the accident due to hazardous goods.

The relief provided under this act is structured as laid down in the Act for death, injury etc. separately.

Who can claim compensation?

Claim can be made:

·        by the person who has sustained the injury;

·        by the owner of the property to which the damage has been caused;

·        where death has resulted from the accident, by all or any of the legal representatives of the deceased.

Every application shall be made to the Collector and shall be in such form, contain such particulars and shall be accompanied by such documents as may be prescribed. No application for relief shall be entertained unless it is made within five years of the occurrence of the accident.

What is the compensation?

After receiving an application, the collector, will hear the parties, to be heard, will examine the request or one of the claims and pass an award which he thinks is fair and state the name of the person / persons to whom this compensation will be paid.

Collectors will arrange delivery of copies of prices to interested parties quickly and in any case within fifteen days from the date of the assignment.

Policyholder must deposit an amount that is instructed by the Collector.

 

The Collector has all the powers of the civil court for the purpose of taking oath by evidence and forcing the presence of witnesses and forcing and presenting documents and material objects and for other purposes that may be determined, and the Collector is considered a civil court for all purposes with respect to this Act.

It must be a natural financial plan for any business owner, to insure with suitable policies as there is a lot of interaction with general public, customers etc. Mandatory polices such as the Public Liability Insurance Act also protect the liabilities of the owner when the unexpected happens.

 

We at Zen Insurance Brokers assist in choosing the right insurance cover for your business units. Plan your insurance program wisely and contact us for assistance.

Disclaimer:

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.