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Public Liability & Professional Indemnity Policy

The last thing you want is for your business to harm another person – but whatever line of work you’re in, it always comes with risks. If your business involves interacting with members of the public, there’s a chance that something could go wrong.

Is public liability insurance mandatory in India?
Under the Public Liability Insurance Act, 1991, it is mandatory for you to take the PLI cover to safeguard yourself from the claims due to mishaps and harm caused to the public.

The main objective of the Public Liability Insurance Act 1991 is to provide for damages to victims of an accident which occurs as a result of handling any hazardous substance. The Act applies to all owners associated with the production or handling of any hazardous chemicals.

What is the major objective of public liability insurance Act 1991?
The main objective of the Public Liability Insurance Act 1991 is to provide for damages to victims of an accident which occurs as a result of handling any hazardous substance. The Act applies to all owners associated with the production or handling of any hazardous chemicals.

5 businesses that need public liability insurance

Without insurance, the businesses below risk the chance of a single lawsuit bankrupting them.

Chemicals manufacturing businesses

After the Bhopal tragedy in 1984, the government made it compulsory for any business that deals in a hazardous environment to take the public liability policy.

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Restaurants

PLI protects the restaurants from the costs incurred due to damages. A few likely situations include accidental spilling of hot food, falling cutlery or slippery floors. It also protects the business if a customer seeks damages for alleged food poisoning.

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Contractors

The insurance will protect you from any claim that is made against you for any damage to the customer’s equipment, property or injuries to a person while you are working there.

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Hospitals

Hospital is another business that is prone to the risk of getting sued due to property damage or personal injury that occurs during the course of their business operations.PLI does not cover any injury or death caused by the negligence of the doctor. For such risk, professional indemnity insurance cover is required for the doctors.

 

Schools and colleges

Suppose a fire breaks out in your school/college premises due to which few students get injured — PLI can cover the financial cost of defending your case in the court and paying any claims made by the students.

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In the forest
Diner

Public liability insurance policy protects businesses and their owners from the risk of being sued for any bodily injury or property damage that occurs on their business premises.
What’s covered in a public liability insurance policy:

  • Bodily injury

  • Property damage

  • Legal expenses

  • Claim’s cost

What’s not included in the policy:

  • Loss of reputation or defamation

  • Mental loss

  • Employee injury/accident

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There are two types of public liability insurance made for different types of businesses
Public liability policy (industrial risk)
This type of insurance is provided for:

  • Manufacturing units

  • Warehouses

  • Godowns

In the business that involves the usage of big premises, heavy machinery, and raw materials, the risk of anyone getting injured is very high.
Public liability policy (non-industrial risk)
Even if you have a non-industrial type of business, you and your business are still prone to claims arising due to mishaps or sudden risk.
Therefore, this type of insurance policy is meant for non-manufacturing businesses like:

  • Schools

  • IT companies

  • BPOs

  • Restaurants

  • Hospitals

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Getting public liability insurance can mean an extra expense for businesses – but without it, you run the risk of losing serious amounts of money. If someone files a claim against you and you don’t have public liability, you’ll have to pay for a solicitor out of the company funds or even your own pocket – and solicitors’ fees can run into the thousands per day. If a claim goes to court, you’ll have to take time off work to deal with the case – and if the court finds against you, it’s possible you’ll have to pay crores in damages to the other side, plus their own legal fees.

Doctor

​A Professional Liability Insurance (also called Professional Indemnity Insurance) is something that is there to protect businesses or even professionals who provide services or advice, such as accountants, lawyers, or doctors, against any claims of negligence or unintentional breach of a written contract, or infringement or misappropriation of any intellectual property from their clients.

WHO MUST HAVE PROFESSIONAL INDEMNITY COVER?

  • Medical Professional

  • Lawyers

  • Accountants

  • Engineers

  • Architects

  • IT Professionals

Why do you need a Professional Liability Insurance?

Getting public liability insurance can mean an extra expense for businesses – but without it, you run the risk of losing serious amounts of money. If someone files a claim against you and you don’t have public liability, you’ll have to pay for a solicitor out of the company funds or even your own pocket – and solicitors’ fees can run into the thousands per day. If a claim goes to court, you’ll have to take time off work to deal with the case – and if the court finds against you, it’s possible you’ll have to pay millions in damages to the other side, plus their own legal fees.

But why do you really need it?
You and your business will be protected against huge legal expenses in case someone makes a claim against you.
It will help your business run more smoothly, as you won’t need to worry about expensive lawsuits.
What is covered in a Professional Indemnity Insurance?

  • Professional Negligence

  • Bodily Injury and Property Damage

  • Loss of Documents

  • Legal costs and expenses

  • Public Relations Expenses

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What is Not Covered?

  • Any criminal act, fines, and penalties.

  • Deliberate or intentional acts of negligence and omission.

  • Deliberate or intentional acts of negligence and omission.

  • If the services were rendered while under the influence of intoxicants or narcotics.

Who all need a Professional Indemnity Insurance?

  • If you or your business provide advice to your clients

  • If you or your business provide some form of guidance

  • If you or your business provide other professional services

  • If you or your business provide designs to your clients

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When you get professional indemnity insurance, you’ll be covered in case someone raises a claim against you (or your employees) for any negligent acts or some unintentional error.
This includes:

  • Any damages caused due to mistakes, omissions, or negligence in professional services.

  • Failing to uphold any promised services.

  • Loss or damage to any documents or data.

  • Financial loss or damage to third-party suffering from a bodily injury or property damage.

  • Legal fees and expenses.

  • Public relations expenses.

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