Public liability insurance (Act) is an essential coverage for companies involved in the manufacturing or handling of hazardous chemicals. It ensures that compensation is provided to victims of accidents caused by the handling of these substances. As per the Public Liability Insurance Act of 1991, every firm that owns, controls, or handles hazardous chemicals listed under the Act's provisions is required to obtain this insurance. This ensures that immediate financial assistance is available to those affected by incidents such as gas leaks or chemical exposure in nearby communities.
The Public Liability Act was introduced in response to the Bhopal Gas Tragedy of 1984, where approximately 40 tons of methyl isocyanate leaked due to negligence. Following this disaster, the government mandated that companies handling dangerous substances must have insurance coverage to address potential risks. The Public Liability Insurance Act of 1991 makes it mandatory for every company in India dealing with hazardous substances to obtain this insurance, ensuring that they have adequate coverage to financially compensate victims of any incidents caused by their operations.
Providing immediate relief during unforeseen accidents is essential to reduce the economic burden on affected individuals, and it is also a legal obligation. The insurance covers claims for medical expenses and property damage caused by hazardous material exposure or destruction.
Hazardous chemicals covered under Public liability insurance include toxic and explosive substances. Companies dealing with these substances in quantities exceeding specified limits are required to have this insurance to safeguard against potential accidents.
Ensuring compliance with Public Liability Insurance 1991 is not just a legal requirement but a crucial safeguard for businesses dealing with hazardous substances. This law mandates that companies handling such materials must have the right coverage to compensate third parties in case of an accident. But how do you know if your business meets the requirements?
Public Liability Insurance 1991 is designed to protect businesses and the public from unforeseen liabilities arising from hazardous activities. Regularly reviewing your coverage ensures that your policy meets legal standards and provides the necessary financial security. If there is any uncertainty about compliance, now is the time to reassess your insurance needs.
A common question businesses have is whether there is a difference between public liability insurance and Public Liability Insurance 1991. While both offer protection against third-party claims, there are key distinctions.
| Point of Comparison | Public Liability Insurance | Public Liability Insurance Act, 1991 |
|---|---|---|
| Definition | A voluntary insurance policy that helps businesses cover risks from third-party injury, property damage, or legal expenses. | A mandatory legal requirement under Indian law for businesses handling hazardous substances to provide immediate relief to victims of accidents. |
| Applicability | Any business or individual who wants to protect themselves from unexpected third-party claims. | Specifically applies to industries handling hazardous substances as defined under the Act. |
| Legal Requirement | Optional for general businesses, but highly recommended to manage liability risks. | Mandatory for businesses that deal with hazardous materials to ensure compliance with the law |
| Coverage Scope | Covers bodily injury, property damage, and legal expenses arising from third-party claims. | Ensures immediate compensation to victims of accidents involving hazardous substances without getting caught up in lengthy legal battles. |
| Penalties for Non-Compliance | No direct penalties, but it’s a smart move to avoid unexpected costs. | Failing to comply can lead to heavy penalties and/or legal consequences |
Kochi Gas Leak (2015): The leakage of acetylene gas caused a temporary explosion, resulting in fatal injuries to workers and health damage to nearby families. Victims were able to claim compensation for medical expenses and damages under the Public Liability Insurance policy.
LG Polymers Gas Leak (2020): A styrene gas leak from the LG Polymers India Limited facility in Visakhapatnam led to the deaths of 12 people and over 1,000 hospitalisations. Compensation for medical and other expenses was provided under the Public Liability Insurance Act.
The Public Liability Insurance Act of 1991 plays a vital role in protecting communities and individuals from the risks posed by hazardous industries. Companies handling harmful chemicals are legally required to obtain this insurance, ensuring preparedness for future accidents and holding businesses accountable for their operations.
It is important to note that a portion of the claims also contributes to the Environmental Relief Fund, further highlighting the Act's focus on safety and environmental responsibility. This compulsory coverage provides immediate financial relief to victims and ensures that companies remain accountable by mandating insurance to protect individuals and communities from the risks posed by hazardous substances. The legislation ensures that affected parties can quickly claim compensation for medical expenses and property damage, offering essential economic relief in the aftermath of unforeseen accidents.
