Simply put, public liability insurance policy covers a policyholder from claims from third parties for death or injury or property damage caused by hazardous substances handled in a factory.
Industry sources told IANS that the insurance policies of the Mumbai-headquartered LG Polymers are with a consortium of insurers – government and private — though the value of insurance coverage under the Public Liability Insurance is not known.
“The policy value limits stipulated in the Public Liability Insurance Act are very low and need upward revision,” an industry official told IANS preferring anonymity.
According to the official, many industries prefer to limit their exposure to Rs 5 crore per accident as stipulated in the Public Liability Insurance Act.
Industry officials said the compensation paid under the mandatory insurance policy in the case of death and permanent total disability is Rs 25,000 per person. The amount paid towards medical expenses is Rs 12,500 per person and a maximum of Rs 6,000 for property damage.
As per the Public Liability Insurance Act, factories handling/transporting hazardous items have to compulsorily opt for this policy before starting their operations.
An amount equal to the basic premium is to be paid as a contribution to the Environment Relief Fund (ERF), managed by the Ministry of Environment & Forests.
The ERF is used by the Government for providing relief to people affected by accidents resulting from “hazardous substances”.
General insurance industry officials said apart from the statutory policy, business establishments can go in for a separate policy for enhanced sum insured to meet the compensation awarded by courts.
LG Polymers is part of the South Korean group LG Chemical. It is one of the leading manufacturers of polystyrene and expandable polystyrene in India.