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What is the Public Liability Insurance Act?

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  • Written By: Daphne Mallory
  • Edited By: Melissa Wiley
  • Last Modified Date: 01 November 2016
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The Public Liability Insurance Act is legislation that was passed by the government of New Delhi. The person who owns or controls the handling of the hazardous substances is required by this law to take out liability insurance prior to hiring workers to handle those substances. The law protects workers from accidents, death, or damage to property resulting from working with dangerous substances, and the owner will be held liable without the need for the worker to show that the owner acted with neglect or wrongfully in any way. The law provides a cap on the maximum amount of liability insurance that the owner has to take out, which is 50 million rupees. The central, state, and local governments are exempt from the provisions of the act, including any corporation that is controlled by a government entity.

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The goal of the Public Liability Insurance Act is to compensate workers who are injured during employment when working with hazardous materials. Employers must get enough liability insurance to ensure that they are able to compensate workers for the injuries or damages that they suffer. A worker can often file a claim for medical expenses, but also to collect current and future loss of earnings. For example, an employee of a company who suffers burns can file a claim pursuant to the act and get paid for hospitalization costs and the wages that he loses as he recovers. The worker often doesn’t have to prove that the owner was negligent and that his negligence led to the injury in order for the worker to file a successful claim.

Owners have to meet certain legal requirements for the amount of insurance they must take out in connection with the business. The value of the insurance policy cannot be less than the paid-up capital of the business. The Public Liability Insurance Act defines paid-up capital as the market value of all the stocks and the business’s assets as of the date when the owner signs a contract for insurance. The law states that the owner does not have to take out more than 50 million rupees. The owner is often not liable for more than the coverage amount provided by the insurance policy.

The Indian government and the corporations it controls are exempt from the requirements of the Public Liability Insurance Ac, if a fund is in place to compensate workers for injuries. The fund has to be sufficient to meet the needs of the workers as required by the act. The government is often not required to take out a liability insurance policy.

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