A NOTE ON PUBLIC LIABILITY INSURANCE ACT 1991
The growth of chemical industries in INDIA brings about different kinds of hazards and their corresponding risks, in any unforeseen serious accident which can occur during handling hazardous substances and the detrimental effects it causes not only affects the employees working in the organizations but also to the property and people who stay near to these establishments, the consequences of accident affects everyone either directly or indirectly.
Such accidents can result either in death or injury to people and other living things and damage public and personal property. Most often, the economically weaker suffer a lot due to delayed compensation. Industrial facilities may not be open to compensating the victims due to short of funds
To overcome the above situations and to provide immediate compensation to victims, the organizations' owners shall have/buy an INSURANCE POLICY.
This Act (PUBLIC LIABILITY INSURANCE ACT 1991) came into force after the Bhopal Gas Tragedy 1984 AND gained much importance and introspection after the STYRENE LEAK from LG POLYMERS IN 2020, Vizag
· The main objective of the Public Liability Insurance Act 1991 is to provide immediate relief to persons (other than workmen) affected by accidents occurring while handling hazardous substances through the insurance amount paid by the owner of the hazardous substance based on NO-FAULT LIABILITY
· As per SECTION 4, this law requires all organizations that own or have control over handling of any hazardous substance, to get covered under a “public liability insurance policy cover” whereby the organizations are insured against the claims from the public for death or injury or property damage caused by hazardous substances handled in their enterprise.
· The public who are exposed to the hazardous substance used by the industry can also file a claim with the collector within 5 years of the incident, who will determine the compensation to be paid after hearing both the parties as per SECTION 7 of this act
DEFINITIONS
· “ACCIDENT” means an accident involving a fortuitous or sudden or unintended occurrence while handling any hazardous substance resulting in continuous or intermittent or repeated exposure to death of, or injury to, any person or damage to any property but does not include an accident by reason only of war or radio-activity.
· “HANDLING OF ANY HAZARDOUS SUBSTANCE MEANS”, means any activity related to
o Manufacture
o Processing
o Treatment
o Package
o Storage
o Transportation by vehicle
o Use and collection
o Destruction
o Conversion
o Offering for sale
o Transfer or the like of such hazardous substance.
IMPORTANT POINTS IN PUBLIC LIABILITY INSURANCE ACT 1991
· There are 23 sections and 1 schedule in this act.
· As per SECTION 3, each owner should take an insurance policy before carrying out hazardous works and should ensure that it is extended from time to time before the expiration date so that the insurance policy continues to apply throughout the period in which this processing continues.
· As per SECTION 6, an application for a claim for relief may be made
o by the person who has sustained the injury.
o by the person whose property got damaged
o by legal representatives of the deceased.
o by any agent duly authorized by such person or owner.
· As per SECTION 10, Any person, authorised by the Central Government shall have a right to enter the establishment, if he considers necessary, any place, premises or vehicle, where a hazardous substance is handled to determine the compliance of the provisions as per this act, the owner shall provide all assistance to such person.
· As per SECTION 11, if the central government authorized person finds any deviations concerning the handling of HAZARDOUS substance as per this act, he can seize or serve an order not to remove such substance and even can dispose of to prevent any accident and recover the cost from the owner.
· As per this act, there are certain limits of amount for taking the policy
o Any One Accident Limit (AOA) should not be less than the amount of the paid-up capital of the owner but, should not exceed INR 5 Cr
o Anyone Year limit (AOY) ratio is fixed to 1:3, so the AOY limit shall not exceed INR 15 Cr.
o Anything above these limits is met by ERF (ENVIRONMENT RELIEF FUND)
ESTABLISHMENT OF ENVIRONMENT RELIEF FUND
· Section 7A of the Public liability insurance act empowers the Central Government to establish a central fund known as the ‘ENVIRONMENT RELIEF FUND’. The main purpose of this fund is to provide relief to the victims of accidents over and above the INSURANCE POLICY AMOUNT, if the amount decided by the collector is not sufficiently covered by the INSURANCE POLICY AMOUNT, the extra amount will be taken from this fund.
· The central government by way of notification establishes the ENVIRONMENT RELIEF FUND and also regarding its administrative control and payment of money through the fund
QUANTUM OF RELIEF
S NO | CATEGORY OF RELIEF | MAXIMUM AMOUNT IN RS |
1 | Reimbursement of medical expenses incurred | 12,500 |
2 | Fatal accidents (in addition to medical expenses) | 25,000 |
3 | For permanent total or partial disability or other injury or sickness |
|
| a) Reimbursement of medical expense (in each case) | 12,500 |
| b) Cash relief on the basis of percentage of disablement as certified by an authorized physician | 25,000 |
4 | Loss of wages due to temporary partial disability which reduces earning capacity of the victim, provided the victim has been hospitalized for a period exceeding 3 days and is above 16 years of age | 1000 |
5 | Any damage to private property, based on actual damage | 6000 |
PUBLIC LIABILITY INSURANCE RULES 1991
· As per these rules FORM- I is the application that needs to be filled and submitted for compensation by the CLAIMANT (victim or dependent in case of death)
· If any person has any intention to raise a complaint, he has to fill the requirements as per FORM II
· As per the MINISTRY OF ENVIRONMENT AND FORESTS NOTIFICATION, there are a total of 179 chemicals listed as HAZARDOUS SUBSTANCES, so companies dealing with these HAZARDOUS substances should take POLICY as per the provisions of this act.
· 4 EXAMPLES of HAZARDOUS SUBSTANCES
o TOXIC SUBSTANCE – (Phosgene) – 750 kg
o TOXIC SUBSTANCE – TDI (Toluene diisocyanate) – 10 T
o HIGHLY REACTIVE SUBSTANCES – (Ethylene oxide) – 5 T
o EXPLOSIVE SUBSTANCES – (Nitroglycerin) – 10 T
· If any chemical is not specifically listed in 179 chemicals then the following classes to be taken
SR NO | TYPE | DESCRIPTION | QTY |
1 | Flammable gases | Substances in the gaseous state at normal pressure when mixed with air become flammable and the boiling point of which at normal pressure is 20° C or below. | 15 T |
2 | Highly flammable liquids: | Substances that have a flash point lower than 23° C and the boiling point of which at normal pressure is above 20° C | 1000 T |
3 | Flammable liquids | Substances that have a flash point lower than 55° C and which remain liquid- under pressure, where particular processing conditions, such as high pressure and high temperature, may create major accident hazards | 25 T |
Article by PJ Mohan
Sr.Faculty, NIFS
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