In this article, You will read Public Liability Insurance Act, 1991 – for UPSC IAS.

Public liability

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.

What does PLI Act say?

  • Public Liability Insurance (PLI) Act, 1991 makes it obligatory upon the user industries handling 179 types of chemicals and compounds and other classes of flammable substances to subscribe to a special insurance policy to cover the liabilities likely to arise on account of any chemical (industrial) disaster/accident and payable to those affected people who are not the workers on ‘no-fault basis’/ ‘absolute liability.
  • The Act establishes an Environment Relief Fund (ERF), which is subscribed by all such user industries by an amount equal to the annual premium amount of such insurance policies.

Public Liability Insurance Act, 1991

  • Public Liability Insurance Act,1991 is to provide the compensation for damages to victims of an accident of handling any hazardous substance or It is also called, to save the owner of production/storage of hazardous substance from hefty penalties. 
  • This is done by proving compulsory insurance for third-party liability. As from the name of the act, it is Public Liability.
  • 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 substances used by the 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.
  • Public Liability Insurance Act is administered by the Ministry of Environment Forest and Climate Change.
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