Oct 18, 2017
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Public Liability Insurance Act Overview

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What is Public Liability Insurance?

The Public Liability Insurance Act 1991, provides for mandatory Public Liability Insurance. Under the Act, companies need to take for installing, handling any hazardous substance notified under the Environment Protection Act.

The growth of hazardous industries, processes and operations in India has been accompanied by growing
risks of accidents, not only to the workmen of such undertakings, but also members of the public in the vicinity.

Therefore, under Public Liability Insurance Act 1991, every owner, before starting to handle any hazardous substance, have to take out one or more policies covering liabilities for providing immediate relief on a specified scale to any person suffering injury or damage to property, in the event of death, to the legal heirs of the deceased.

The Public Liability Insurance Act, 1991, has been enacted for providing immediate relief to the persons affected by accidents, occurring while handling any hazardous substance and for other incidental and connected matters.

Application for Relief:

Under the Public Liability Insurance Act an application for relief made by the applicant to the Collector within 5 years of the accident, after giving notice to the owner and the insurer and giving the parties an opportunity of being heard, shall make the award determining the amount of relief payable. The victim will however be free to approach the Court for higher compensation.

Establishment of Relief Fund:

Section 7A of the Public Liability Insurance Act, empowers the Central Government to establish Environment Relief Fund, by notification in the official Gazette, towards the utility of paying relief under an award made by the collector under Section 7 of this Act.

Power to Call for Information, Entry and Inspection:

Public Liability Insurance Act  deals with the powers to call for information, entry, inspection, search and seizure. The owner of hazardous installation becomes obligated to submit to a person authorized by the Central Government such information the inspector reasonably needs for the purpose of ascertaining, any requirements, rule or directions made under this Act, require compilation.

Power to give directions:

Section 12, of the Public Liability Insurance Act 1991 empowers the Central Government to issue directions in writing to any owner, officer,  or agency. The directions also include the prohibition or regulation of handling hazardous substances. Moreover, it also can control the supply or stoppage of electricity.

Offences and Penalties:

The Public Liability Insurance Act 1991 provides for the penalties of non-compliance:

Non-compliance of not taking an insurance policy.

Furthermore, failure to comply with any direction issued with regard to prohibition or regulation of the handling of any hazardous substance or stoppage of supply of electricity, water etc.

Punishable with an imprisonment for a minimum period of one year and six months but which may extend to six years, or with fine, which shall not be less than one lakh rupees or with both.

For subsequent offences, the person shall be punishable with the minimum imprisonment of two years. However, it can extend to seven years, with fine of not less than 1 lakh rupees.

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