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Section 4 – The Public Liability Insurance Act,1991

The Public Liability Insurance Act,1991

Section 4. Duty of owner to take out insurance policies

(1) 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. (2) Every owner shall get the insurance policy, referred to in subsection (1), renewed from time to time before the expiry of the period of validity thereof so that the insurance policies may remain in force throughout the period during which such handling is continued.

1(2A) No insurance policy taken out or renewed by an owner shall be for an amount less than the amount of the paid-up capital of the undertaking handling any hazardous substance and owned or controlled by that owner, and more than the amount, not exceeding fifty crore rupees, as may be prescribed. Explanation-For the purposes of this sub-section, “paid-up capital” means, in the case of an owner not being a company, the market value of all assets and stocks of the undertaking on the date of contract of insurance.

(2B) The liability of the insurer under one insurance policy shall not exceed the amount specified in the terms of the contract of insurance in that insurance policy.

(2C) Every owner shall also, together with the amount of premium, pay to the insurer, for being credited to the Relief Fund established under Section 7A, such further amount, not exceeding the sum equivalent to the amount of premium, as may be prescribed. (2D) The insurer shall remit to the authority specified in sub-section (3) of Section 7A the amount received from the owner under subsection (2C) for being credited to the Relief Fund in such manner and within such period as may be prescribed and where the insurer fails to so remit that amount, it shall be recoverable from the insurer as arrears of land revenue or of public demand.]

(3) The Central Government may, by notification, exempt from the operation of sub-section (1) any owner, namely:-

(a) The Central Government; (b) Any State Government; (c) Any corporation owned or controlled by the Central Government or a State Government; or (d) Any local authority:

Provided that no such order shall be made in relation to such owner unless a fund has been established and is maintained by that owner in accordance with the rules made in this behalf for meeting any liability under sub-section (1) of Section 3.


1. Ins. by Act No. 11 of 1992.

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The Public Liability Insurance Act,1991

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