Public Liability Insurance Act

Public Liability Insurance Act


  • The 1991 Public Liability Law regulates mandatory liability insurance. Under the law, companies must commit to installing and handling hazardous materials that have been reported under the Environmental Protection Act, 1986.
  • It is basically a part of tort law, which focuses on the misconduct of civil law. The applicant (the injured party) usually sues the accused (owner or convict) according to general law due to negligence and/or damage.
  • Claims are generally successful if it can be proven that the owner/occupant is responsible for the injury and therefore violating his maintenance obligations.
  • Once a due diligence violation has been identified, a lawsuit in a court may succeed. The court will provide financial compensation based on the applicant’s injury and loss.
  • As the rate of such dangerous industries grow it is a threat not only to the employees or the workers but also the people near.

Basics of the Law

  • Public Liability Insurance deals with hazardous substances; each owner must conclude one or more contracts which include the obligation to provide direct compensation.
  • It should be provided to all those who have suffered damages that should be given to the property of the deceased legal heir in the event of their death.
  • The 1991 Public Liability Act was ordained to provide direct assistance to people affected by accidents related to handling hazardous materials and other coerced and related matters.
  • Coverage insurance is claimed when someone is injured at the place of business. Places like shopping centres, night clubs, and theatres need this type of insurance to protect themselves.


I. Bhopal Gas Tragedy Union Carbide Corporation vs Union Of India Etc on 4 May 1989

  • It is also known as the Bhopal disaster, in which thousands of people lost their lives. This is considered the worst industrial disaster in the world that happened on a cold winter night in the early hours of December 3, 1984.
  • Around midnight, a chemical reaction began at the Union Carbide (India) Limited plant, which resulted in the release of a deadly gas methyl isocyanate (MIC) from one of the tanks. As a result, the gas cloud gradually tumbled enveloping the city within its deadly folds.
  • Both the city and the lake had become a gas chamber. Nearly 3,000 people died in the tragedy, and thousand more were physically injured and affected in various forms.
  • Wildlife was killed, injured, and contaminated. The business was totally cut off. People’s lives were affected. The environment was polluted disturbed ecology and wildlife.
  • An estimated 40 tons of methyl isocyanate (MIC) gas leaked from the Union Carbide Factory. Lessons learned from the Bhopal gas tragedy were quickly forgotten.
  • The Public Liability Insurance Act 1991 came into force after the tragedy and aims to provide immediate assistance to victims of accidents involving hazardous industries.
  • However, activists argue that legal provisions are not enforced by collectors appointed as law enforcement agencies.
  • According to Section 4 of the law, owners of companies that use hazardous substances take out insurance policies to cover liabilities from accidents that cause death, injury, or injury.
  • In addition, Section 7 A, i) and (ii) regulate the establishment of a central government environmental promotion fund to be used in accordance with the law to pay assistance to accident victims in dangerous companies.
  • The law also regulates business owners to take insurance policies that cover obligations not less than the paid-up capital of the business and not more than Rs 50 crore.
  • In Bhopal leak gas case MIC leaked from the plant of union carbide India Ltd, which caused the death of 3000 persons and serious injuries to a large number of people.

II. Vizag Gas Leak: LG Polymers Gas Leak at LG Polymers Chemical Plant in RR Venkatapuram Village Visakhapatnam in Andhra Pradesh

  • Another disaster-affected people in the Gopalapatnam region in Visakhapatnam, Andhra Pradesh. On the eerie night of May 6, 2020, respiratory problems occurred, and nearly 13 people were reported to have died in a very short period of time, and thousands were hospitalized with serious complications on May 7.
  • The leak was discovered from LG Polymers India Limited. This produces polystyrene, a type of plastic used in consumer goods such as toys and household appliances.
  • The gas that comes out is called styrene. This gas is stored at cold temperatures. This resulted in a chemical reaction and heat being released in the tank, causing gas to come out.
  • Inhaling air contaminated by this deadly gas caused respiratory problems, central nervous system depression, and several other deadly diseases.
  • The Prime Minister took cognizance of the accident and the NDRF special team (National Chemical Disaster Management Force) for the CBRN (chemicals, biology, radiology and nuclear) was moved by the scene of the accident.
  • The Andhra Pradesh High Court, the National Human Rights Commission, and the Apex court took suo moto cognizance about the case and sent communications to the central and state governments to investigate the incident.
  • According to the Public Liability Insurance Act, company owners must take out an insurance policy with hazardous substances within one year after starting work.
  • LG Polymers has two policies-one that is the Public Liability Act policy which is mandatory according to the Act-AOA (Any One Accident) of Rs 5 crore, and also has an industrial PLI policy limited to 5 crore – both are from New India Assurance.
  • An AOA of Rs 5 crore means that the company will be liable to pay up to Rs 5 crore (in total, for all victims) per accident. also, the central government can establish an environmental support fund to provide legal assistance to accident victims in dangerous companies The NGT issued the orders under Sections 14 and 15 of the NGT Act, 2010.
  • The NGT smacked a provisional detriment of Rs 50 crore on LG Polymers India and pursued a response from the centre on Friday in the gas leak incident. Andhra Pradesh, saying “there seems to be a fault in fulfilling the told Rules and other statutory provisions”.

Major provisions made in the Public Liability Insurance Act

Following are some of the relevant provisions of this Act:

Defined as:

1. An accident is a sudden or unexpected incident, which is related to a hazardous substance that causes continuous or temporary exposure or injury to a person but does not result in an accident that is solely caused by war or war radioactivity.

2. To deal with hazardous substances is to manage the production, handling, packaging, storage, transportation of vehicles, use, collecting, destructing conversion, making offers for sale, removal from such hazardous substances Insurance – is liability insurance in accordance with subsection 3 of Section 1.

3. The owner is the one who controls and handles hazardous substances at the time of the accident:

a. Partners, in the case of a company

b. Any member, in case of an association prescribed are the rules made in this act, relief fund is the environmental relief fund established under Section 7A.

The vehicle is any mode used for transport that does not include railways.

The relief provided under this act

Compensation for liability in certain cases without error

  1. As in Section 3 If the death or injury of another person (other than a worker) or property damage due to an accident has occurred, the owner is obliged to provide the assistance listed on the list for the death, injury, or damage.
  2. In a claim for compensation under Section 1 (hereinafter referred to as this law as compensation), the plaintiff does not need to declare and prove that the death, injury, or damage on which the claim was based on an action, neglecting or not showing one’s performance.

Explanation: For the purposes of this;

  1. “Employee” has the meaning assigned to it in the Employee Compensation Act 1923
  2. “Injury” includes a permanent or total permanent disability or partial illness resulting from an accident

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