The Public Liability Insurance Act of 1991 comprises 23 sections and one schedule. The act was brought to provide relief to the victim for the negligence act of the insured. It came into force on April 1, 1991. In addition, the act was enacted by the parliament in the 41st year of the Republic of India. It is the 6th act of 1991.
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The Act sets out several key provisions that must be adhered to for public liability insurance to be valid and effective. These include:
Section 3 states that the owner shall be responsible for the death or injury caused to the third party due to negligence of the business or employee.
Section 4 mandates the duty of the owner to take or buy insurance policies that deal with or handle hazardous substances. He must buy one or more insurance policies within one year from the commencement of the business. Further, the insurance policy must be renewed from time to time.
Section 5 of the Public Liability Insurance Act, 1991 mandates the collector (under whose jurisdiction an accident took place) to verify and publicize the event with cause publicity in order to aware the public and invite applications from the public as prescribed under section 6.
Section 6 states that the public shall make the application for a claim if they have sustained an injury from the event or accident that occurred. The section further states that no application can be entertained if made after five years of such an occurrence. Furthermore, the application must be made to the collector and must be accompanied by a substantial document as prescribed by the authority.
The central government may constitute an advisory committee to deal with matters about the insurance policy. The committee shall consist of:
The chairman of the committee shall be the member appointed or nominated by the central government.
The act of 1991 mandates industries to purchase liability policies. Under the act, the industries or companies dealing with hazardous substances must commit to installing it if the material is reported under the Environment Protection Act, 1986. The public liability policy is a part of the law of tort, which explicitly focuses on civil law.
The applicant (victim or injured party) generally sues the defendant under negligence claim for the damage suffered by the former due to the act of the latter. However, if the rate of such acts increases, it is not only a threat to employees or workers but it may exceed the people residing nearby. Hence, it is imperative to buy Public Liability Insurance.
Conclusion
The Public Liability Insurance Act is the result of the Bhopal Gas Tragedy. The tragedy caused multiple deaths due to the leakage of gas in the city. Therefore, the government passed the act in the parliament to protect the interest of the victim and encourage business owners or individual professionals who deal with people to purchase professional indemnity insurance and avoid such tragedies.
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