Overview
The Principle of No-Fault Liability under the Public Liability Insurance Act, 1991 mandates that compensation must be provided to victims of hazardous industrial incidents without requiring proof of negligence or fault by the owner.
This principle ensures that affected individuals are promptly compensated for injuries, death, or property damage resulting from hazardous substances. Unlike traditional legal procedures, where the burden of proof lies with the victim, this law shifts responsibility directly to the business or owner, simplifying and speeding up relief efforts.
The Act also makes it mandatory for companies dealing with hazardous substances to purchase public liability insurance and contribute to an Environmental Relief Fund, ensuring financial preparedness in case of an accident.
The principle of no-fault liability is incorporated in Section 3 of the Public Liability Insurance Act 1991 and is further extended by Section 4 of the Act. This concept was introduced to provide a safe industrial environment for the workers handling hazardous substances and to get financial benefits from the insurance policies. In this blog post, we will focus on the principle of no-fault liability of the Public liability act insurance and its salient features.
Aim of the Public Liability Insurance Act 1991
In 1984, the Bhopal Gas leak tragedy was a catastrophic incident that shook the core of the Indian legal system. This injury and damage were immeasurable. The gas release exposed over 500,000 people in small towns, resulting in injuries and fatalities among many workers. As the government was still struggling to give adequate relief to the victims as well as their families, the Oleum Gas leak tragedy came forth. This imposes the government to take note and make appropriate provisions for a safe industrial environment. Therefore, the Public Liability Insurance (PLI) act was introduced to provide immediate relief to the victims of industrial incidents and accidents occurring as a result of handling hazardous substances. This Act is the statutory mandate upon every industrial owner. It’s to take out the liability insurance policy before dealing with and managing any sort of hazardous substances in the industry.
Salient Features of Liability to Give Relief on the Principle of No-Fault
Certain cases involved the principle of no-fault include:-
- When there is death or injury to any person, other than a workman, or damage to property resulting from the accident. The company owner shall be liable to provide relief as specified in the schedule for such death, injury, or damage.
- In any claim for relief mentioned above, a claimant shall not be required to establish that the death, injury or damage. Any person’s wrongful act, neglect, or default can lead to a valid claim.
This section 3 of the PLI Act disentitles “Workmen”, (as defined in the Workmen Compensation Act) as claimant. Moreover, the definition of “injury” includes permanent total or permanent partial disability or sickness resulting from an industrial accident.
Takeaway
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FAQ
Q) What is the principle of no-fault liability?
A) The no-fault liability principle holds individuals or entities responsible for damages or injuries regardless of whether they were at fault or negligent. This means that compensation is awarded based on the harm suffered, rather than on who caused the damage.
Q) How does the principle of no-fault liability differ from traditional fault-based liability?
A) In traditional fault-based liability, compensation is awarded based on the party’s negligence or fault in causing the harm. On the other hand, no-fault liability does not require proving fault, making it easier for victims to receive compensation.
Q) What are some common examples of situations where the principle of no-fault liability applies?
A) Examples of situations where no-fault liability may apply include car accidents covered by no-fault insurance, workers’ compensation for workplace injuries, and certain product liability claims.
Q) What are the benefits of the principle of no-fault liability?
A) The principle of no-fault liability can expedite the compensation process for victims, reduce the need for lengthy and costly legal battles to determine fault and provide more certain and predictable outcomes for those seeking compensation.
Q) Are there any limitations to the principle of no-fault liability?
A) While the principle of no-fault liability can streamline the compensation process, it may also limit the ability of victims to seek additional damages for pain and suffering or punitive damages. It is important to understand the specific laws and regulations governing no-fault liability in your jurisdiction.
Q) What is the principle of no-fault liability in the Public Liability Insurance Act, 1991?
A) It means a company must pay compensation to victims of hazardous accidents without the victim needing to prove negligence or fault.
Q) Who is liable under the Public Liability Insurance Act, 1991?
A) The owner or operator handling hazardous substances is held strictly liable, regardless of fault or negligence.
Q) What is the purpose of no-fault liability?
A) To ensure swift compensation for victims of industrial accidents and simplify legal procedures by eliminating the need to prove fault.
Q) Is insurance mandatory under the Public Liability Insurance Act?
A) Yes, the Act requires all businesses dealing with hazardous materials to have public liability insurance and contribute to the Environmental Relief Fund.
Q) What is the role of the Environmental Relief Fund?
A) It provides additional compensation to victims of hazardous incidents when insurance coverage is insufficient.
Q) Does no-fault liability apply to all industries?
A) Only to those industries and operations involving hazardous substances as defined under the Act.
About The Author
Rajesh Mehta
MBA Finance
Rajesh has become a distinguished expert in liability insurance with over 8 years of extensive experience in the insurance industry. As a dedicated writer for SecureNow, he crafts insightful and informative blogs and articles that help businesses and individuals understand the nuances of liability insurance, from policy details to industry trends. Throughout his career, Rajesh has developed a profound knowledge of various types of liability coverage, including professional, general, and product liability insurance. Their expertise enables them to break down complex topics into accessible content, making it easier for readers to make informed decisions about their insurance needs.
