THE PUBLIC LIABILITY INSURANCE ACT – 1991

This Act, unique to India, imposes on the owner the liability to provide immediate relief in respect of death or injury to any person or damage to any property resulting from an accident while handling any of the notified hazardous chemicals. This relief has to be provided on ‘no fault’ basis. To be able to meet this liability, the owner handling hazardous chemicals has to take an insurance policy of an amount equal to it’s “paid up capital” or upto Rs. 500 millions, whichever is less. The policy has to be renewed every year. New undertakings will have to take this policy before starting their activity. For existing plants the policy was to be taken within one year of the Act coming into force i.e. upto 31st March, 1992. The reimbursement of relief to the extent of Rs. 25,000/- per person is admissible in case of fatal accidents in addition to the reimbursement of medical expenses upto Rs. 12,500/-. The liability of the insurer is limited to Rs. 50 million per accident upto Rs. 150 millions per year or upto the tenure of the policy. Any claims in excess to this liability will be paid from the ERF. In case the award still exceeds, the remaining amount shall have to be met by the owner. The payment under the Act is only for the immediate relief; owners shall have to provide the final compensation, if any arising out of legal proceedings.