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Public Liability Insurance Act, 1991

Topics Covered: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

Public Liability Insurance Act, 1991

What to study?

For Prelims and Mains: Key provisions and significance of the act.

Context: The gas leak at LG Polymers India Private Ltd in Visakhapatnam in Andhra Pradesh has brought back the focus on the Public Liability Insurance.

Over and above the compensation that may be awarded by the Courts, the victims are also entitled to compensation under the company’s Public Liability Insurance, available in terms of the Public Liability Insurance Act, 1991.

What is Public liability?

Simply put, public liability insurance policy covers a policyholder from claims from third parties for death or injury or property damage caused by hazardous substances handled in a factory.

About the Public Liability Insurance Act, 1991:

The Act came into being in the aftermath of the Bhopal Gas Tragedy.

  • This law requires all enterprises that own or have control over handling of any hazardous substance, to subscribe to a “public liability insurance policy cover” whereby they are insured against the claims from third parties for death or injury or property damage caused by hazardous substances handled in their enterprise.
  • The compensation payable under this Act is also irrespective of the company’s neglect. The victims who are exposed to hazardous substance used by an industry may file a claim with the Collector within 5 years of the accident.
  • On receipt of an application, the Collector, after giving notice to the owner and after giving the parties an opportunity of being heard, will hold an inquiry into the claim and may make an award determining the amount of relief which appears to him to be just.


However, the amounts under this Act, as specified in the Schedule, were stipulated nearly two decades ago. Resultantly, the compensation under the Act is very meager and the families of victims’ who have died due to the gas leak or have suffered permanently disability, are entitled only to a maximum compensation of Rs 25,000, in addition to a maximum of Rs. 12,500, as reimbursement for medical expenses.

  • In cases where a victim has suffered permanent partial disability or other injury or sickness, the relief available if (a) reimbursement of medical expenses incurred, if any, up to a maximum of Rs. 12,500 in each case and (b) cash relief on the basis of percentage of disablement as certified by an authorized physician.
  • For loss of wages due to temporary partial disability which reduces the earning capacity of the victim, a fixed monthly relief not exceeding Rs. 1,000 per month has been stipulated, up to a maximum of 3 months, provided the victim has been hospitalized for a period exceeding 3 days and is above 16 years of age.
  • For any damage to private property, an amount of up to Rs. 6,000 is payable, depending on the actual damage.


Prelims Link:

  1. Compensation and fines under the Act.
  2. Who is covered?
  3. Procedure for granting compensation.
  4. What is Styrene?

Sources: the Hindu.