Public Liability Insurance

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.

Types of Public Liability Insurance Policies 

• Public Liability Industrial Risks - For manufacturing units, godowns and warehouse 
• Public Liability Non Industrial Risks - For Non Manufacturing entities like IT companies, BPOs, Hotels, Schools, Restaurants and Clubs 
• 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. 

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 :

• 1:1
• 1:2
• 1:3
• 1:4

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).

Add On Covers : Liability Policy can be extended to cover legal expenses arising out of Sudden and Accidental Pollution

• Act of God Perils,
• Transportation Risk
• Carriage of treated effluents etc.
• Coverage for defense cost incurred with prior consent
• Deliberate, willful or intentional non-compliance of any statutory provision.

Exclusions : - 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