Liability Policy

A liability insurance arises under the common law on the basis of negligence or under statutory law (for e.g. - public liability insurance act or workman's compensation act) or 'no-fault basis, that is even when there is negligence. The purpose of a liability insurance cover is to provide indemnity in respect of the damages payable under the law for any personal injury to the third party or damage to the third party property.

Any type of insurance pOlicy that protects an individual or business from the risk of getting sued and held legally liable pertaining to malpractice, injury or negligence. Liability insurancePolicies covers legal costs and any legal payouts for which the insured would be responsible for, if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies.
 

Compulsory public liability insurance:

The public liability insurance Act, 1991 imposes no fault liability i.e. Irrespective of any wrongful act, neglect or default on the owner to pay relief in the event of

A) death or injury to any person (other than a workman within the meaning of workmen's compensation act)

B) damage to property of any person arising out of an accident while handling any Hazardeous substance.

No fault liability: the claimant is not required to prove that the death, injury for damage was due to any wrongful act, neglect or default of any person. The amount of Relef payable under section 3 is as per the schedule incorporated in the act as follows:

  1. Fatal accident - Rs 25,000/- per person
  2. Permanent total disability - Rs 25,000/- per person
  3. Permanent total disability - the amount is paid on the basis of percentage of the disablement as certified by an authorised physician i.e. A registered medical practitioner.
  4. Temporary total disability - this reduces the earning capacity of the victim. A fixed monthly compensation which should not exceed rs. 1000/- per month UptoA maximum of 3months (provided the victim has been hospitalised for a period exceeding 3 days and is above 16yrs of age)
  5. Actual medical expenses - Upto a maximum of Rs 12,500 in each case under (i) & (iv) above
  6. Actual damage to property up to Rs 6,000/-

Types of public liability insurance policy:

1. Public liability industrial risks - these are the manufacturing premises including godowns, warehouse, etc.

2. Public liability non-industrial risks - for non-manufacturing entities like - hotels, motels, club houses, restaurants, boarding & lodging houses, flight kitchens, cinema halls, open air theatres, residential premises, schools, education premises, medical establishments, airport premises (other than aviation liabilities), research institutes and laboratories, schools, educational institutions, public libraries, permanent amusements park, flim studios, circus zoos, depots, warehouses, godowns, shops, tank farms and similar other non-industrial risks.

3. Public liability act - this is a mandatory policy to be taken by owners, users or transporters of Hazardous substance as defined under environment (protection) act 1986 in excess of the minimum quantity specified under the public liability insurance act 1991.

Add-on covers available under public liability policy are:

  1. Sudden & accidental pollution
  2. Act of god perils
  3. Transportation risk
  4. Carriage of treated effluents
  5. Coverage for defense cost incurred with prior consent
  6. Deliberate, willful or intentional non-compliance of any statutory provision.

Exclusions under the policy are:

  1. Arising out of willful or intentional non-compliance of any statutory provisions
  2. In respect of fines, penalties, punitive and/ or exemplary damages
  3. In respect of the damage to the property owned, leased, etc. By the insured or in his custody. This is not deemed to be the third party property. This not deemed to be third party property. The insured can avail of a separate material damage policy.

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