Public Liability (Act) Insurance

Coverage Exclusion


The Bhopal Gas tragedy raised questions about social responsibility of Business Corporate & Central Government in India and emphasised to provide for speedy relief to the unfortunate victims of such disasters / tragedies. To this end, the “Public Liability Insurance Act,1991” was enacted.

The PLI Act casts an obligation on every owner before they commence to handle any hazardous substance, to obtain a Public liability insurance Act Policy. Every owner shall take out, before he starts handling any hazardous substance, one or more insurance policies providing for contracts of insurance whereby he is insured against liability to give relief under sub-section(1) of section 3; Provided that any owner handling any hazardous substance immediately before the commencement of this Act shall take out such insurance policy or policies as soon as may be and in any case within a period of one year from such commencement.

Handling means “Manufacturing, processing, treatment; Packaging; Storage; Transportation by vehicle; Use, collection, destruction, conversion, offering for sale; Transfer or the like of any substance or preparation of hazardous substances.

  1. List of Hazardous substance are provided under the Environment (Protection) Act, 1986 (29 of 1986)
  2. It also specifies the quantity for each substance exceeding which you are legally liable to have PLI Act Insurance Policy in place

The Public Liability Insurance Act Policy covers your legal liability to indemnify the affected parties in respect of accident involving a fortuitous, sudden or unintentional occurrence while handling any hazardous substance resulting in continuous, intermittent or repeated exposure to death, of or injury to, any person or damage to any property.


Liability in respect of each claimant is limited as per section 3(1)of the act as:

  • Reimbursement of medical expenses incurred up to a maximum of Rs. 12,500 in each case.
  • For fatal accidents the relief will be Rs. 25,000 per person in addition to reimbursement of medical expenses, if any, incurred on the victim up to a maximum of Rs. 12,500.
  • For permanent total or permanent partial disability or other injury or sickness, the relief will be (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 authorised physician. The relief for total permanent disability will be Rs. 25,000.
  • For loss of wages due to temporary partial disability which reduces the earning capacity of the victim, there will be a fixed monthly relief not exceeding Rs. 1,000 per month up to a maximum of 3 months: provided the victim has been hospitalised for a period of exceeding 3 days and is above 16 years of age.
  • Up to Rs. 6,000 depending on the actual damage, for any damage to private property.


Public liability insurance is limited to only relief on a limited scale of immediate relief & hence would not prevent the victims to go to Courts for claiming larger compensation.

  • Fines, penalties, punitive and /or exemplary damages
  • Deliberate, wilful non-compliance of any statutory requirements
  • Pure Contractual liability
  • Loss of pure financial nature like loss of goodwill, loss of market share etc.
  • Damage to property owned and/or occupied by the Insured or property under care, control and custody of the Insured
  • Professional liability
  • Dishonest/criminal acts of employees
  • War, strike, riot, civil commotion and/or terrorism
  • Nuclear radiation
  • Damages in respect of losses/liability arising outside India