Public Liability
Highlights
This policy covers the amount which the insured becomes legally liable to pay as
damages to third parties as a result of accidental death, bodily injury, loss or
damage to the property belonging to a third party.
The legal cost and expenses incurred in defending the case with prior consent of the
insurance company are also payable subject to certain terms and conditions.
One can insure more than one unit situated in different locations under a single
policy.
The policy offers a benefit of Retroactive period on continuous renewal of policy
whereby claims reported in subsequent renewal but pertaining to earlier period after
first inception of the policy, also become payable.
Scope
We issue three types of Public Liability Policies.
-
Public Liability Non Industrial Risk - For offices, hotels, cinema houses,
hospitals, schools etc.
-
Public Liability Industrial Risk - For godowns, warehouses and factories.
-
Public Liability Insurance Act 1991 - 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
The Public Liability Policy can be extended to cover the following risks on payment of an additional
premium.
-
Natural calamities like flood, earthquake etc.
-
Pollution Risk subject to NOC from Pollution Control Board.
-
Transportation Risk.
How to select the sum insured?
In Public Liability Policy, the sum insured is referred to as Limit of Indemnity. This limit is
fixed per accident and per policy period which is called Any One Accident (AOA) limit and Any One
Year (AOY) limit respectively. The ratio of AOA limit to AOY limit can be chosen from the following
:
The AOA limit which is the maximum amount payable for each accident should be fixed taking into
account the nature of activity of the insured and the maximum number of people who could be affected
and maximum property damage that could occur, in the worst possible accident in the insured's
premises.
In the case of Public Liability Insurance Act 1991, the AOA limit should represent the paid up
capital of the company subject to maximum of Rs.5 crores. The AOY limit is fixed at 3 times the AOA
limit (Max.Rs.15 Crores).
How to claim?
Legal liability under the Law of Tort ,can arise under several circumstances in insured's premises
such as
- Collapse of building structure
- Accidental falling of fixtures
- Bad maintenance or poor housekeeping resulting in accident to visitors on the premises
- Accidental leakage of toxic substance which pollutes the atmosphere and injures or kills people
The term "liability" means responsibility and "legal liability" means responsibilities which can be
enforced by law. Legal Liability may be classified into Criminal Liability and Civil Liability. Only
Civil Liability claims are payable.
Civil Liability claims will arise if there is prima facie evidence of negligence by the insured
resulting in injury or death to any third party or resulting in damage to property belonging to a
person other than insured, or in insured's custody.
Negligence will be proved only when following conditions are satisfied:
- Existence of duty of care
- Breach of this duty
- Injury suffered by a person or property damaged as a result of that breach.
In case of any event likely to give rise to a liability claim as described above, insurance
company should be informed immediately.
In case any legal notice or summons is received, it should be sent to the insurance company. The
company has the option of arranging the defence of the case.
The event giving rise to the claim should have occured during the period of insurance or retroactive
period and the claim first made in writing against the insured during the policy period.
The maximum amount payable including defence cost will be the AOA limit selected.
The any one year limit will get reduced by the amount of claim or indemnity paid for any one
accident. Any number of such claims made during the policy period will be covered subject to the
total indemnity not exceeding the Any One Year limit.
In case of Public Liability Insurance Act 1991 Policy, any award which exceeds the AOA limit will be
paid by the government through Environment Relief Fund to which the insured has to contribute an
amount equivalent to the premium paid under the Public Liability Insurance Act Policy.
The policy will not pay for claims arising out of contractual liability, intentional non-compliance
of any statutory provision, loss of goodwill, slander, fines , penalties , libel , false arrest ,
defamation , mental injury etc.
