Liability
The liability cover the law makes you buy: hazardous industry and public liability
Most liability cover is a choice. For a business that handles hazardous substances, one kind is not. A refinery fire in Visakhapatnam this week is a reminder of why the law treats some risks differently: because they reach past the fence.
A plume of black smoke over a city, visible for miles, is a reminder that some businesses carry a risk that does not stay behind their boundary wall.
On the night of 2 November, a small blast and then a fire broke out at a storage tank at HPCL’s refinery in Visakhapatnam, sending towering flames and thick smoke over the city and frightening residents in the neighbourhoods around it. The reassuring part is that the plant’s own fire and safety team, with the state fire service, brought it under control, and no one was hurt. But the sight of it carries a lesson for any business that stores or processes hazardous materials: your risk does not stop at your gate, and the law knows it.
For most businesses, liability insurance is something you choose to buy well. For a smaller, high-hazard group, it is something the law requires you to hold. If your operation handles hazardous substances, that distinction is one worth being completely clear about.
In short
- A hazardous-industry accident, a fire, a blast, a leak, can harm the public and the environment outside the premises, not just the business inside.
- For that reason, the Public Liability Insurance Act, 1991 makes public liability cover mandatory for businesses handling notified hazardous substances, to give immediate, no-fault relief to those affected.
- That statutory cover is a floor, not a ceiling: you still need property and fire cover for the plant, workmen’s compensation for your people, and wider liability cover.
- And the best outcome, as this week showed, is the accident that working safety systems contain before it becomes a disaster.
Put simply: the Public Liability Insurance Act, 1991 requires a business that handles notified hazardous substances to carry public liability insurance that provides immediate, no-fault relief to people harmed by an accident involving those substances. It is one of the very few liability covers an Indian business is legally obliged to hold.
When your risk reaches past your fence
Most businesses pose a risk mainly to the people who come to them, customers, visitors, staff. A hazardous facility is different: a fire, explosion or leak can reach homes, people and land well beyond its walls, as the smoke over a city makes visible. That is why the law singles these operations out. The duty is not only to the people inside the gate but to the neighbourhood that never chose to take on the risk, and the law gives that neighbourhood a route to relief that does not depend on a long dispute over fault.
The one liability cover you don’t get to skip
This is the distinction worth being precise about. For the vast majority of businesses, public liability cover is strongly advisable but not compulsory. For those handling notified hazardous substances above the specified thresholds, the Public Liability Insurance Act, 1991 makes it a legal requirement, and ties it to a no-fault relief mechanism so that victims of an accident can receive defined, immediate support without having to prove negligence first. If your operation falls within that definition, holding this cover is not a risk-management nicety; it is compliance.
What it does, and what else you still need
It is just as important to understand what this statutory cover is not. It provides a defined, no-fault relief to those harmed by a hazardous-substance accident. It does not rebuild your plant, it does not pay your injured workers’ statutory dues, and it does not, on its own, meet the larger civil claims that a serious incident can bring. So it sits inside a stack: fire and property cover for the units, plant and stock; workmen’s compensation and personal accident for your people; and wider public or commercial general liability for third-party claims beyond the statutory relief. The mandatory cover is the floor the law insists on, not the whole building.
The best claim is the one you prevent
There is a quieter, more hopeful point in this week’s events. The refinery fire did not become a tragedy, and the reason was not luck; it was that the facility’s own fire and safety systems and people worked, and worked fast. That is the real lesson for every hazardous operation. Cover, statutory or otherwise, is the backstop for when prevention fails. The prevention itself, trained response, maintained systems, honest safety audits, is what keeps a frightening night from becoming a catastrophic one, and it is also what keeps every one of those covers valid.
How a hazardous-industry incident maps to cover
It helps to separate the different harms a hazardous-industry accident causes, because they are answered by different covers, and one of them is required by law. This is category-level — it describes how cover generally works, not any one insurer’s product.
| The harm | The cover that typically responds |
|---|---|
| Harm to the public from a hazardous-substance accident | Public liability under the Public Liability Insurance Act, 1991 (mandatory), and wider public liability |
| Damage to your plant, units and stock | Fire and property (industrial) |
| A worker injured or killed in the incident | Workmen’s Compensation and Group Personal Accident |
| Larger third-party civil claims beyond the statutory relief | Commercial General Liability |
A five-minute check for a hazardous operation
You don’t need a full review to find the biggest gaps. Five questions usually surface them:
- Does your operation handle notified hazardous substances?If so, public liability cover under the 1991 Act is a legal requirement, not an option. Confirm where you stand.
- Do you hold the statutory cover, at the right level?Check that the mandatory public liability cover is in force and sized to the operation.
- Is your industrial fire and property cover adequate, with its conditions met?The plant itself needs cover set on the right value, with safety conditions genuinely maintained.
- Are your workers covered separately?Workmen’s compensation and personal accident are a different cover from public liability, and both matter.
- Does your safety response actually work?Tested systems and trained people are what prevent the loss, protect lives, and keep the cover valid.
Frequently asked questions
Is public liability insurance mandatory for an industrial business?
Not for most. For businesses that handle notified hazardous substances above the specified thresholds, however, the Public Liability Insurance Act, 1991 makes public liability cover a legal requirement. Whether your operation falls within it depends on what and how much you handle, and should be confirmed.
What does cover under the Public Liability Insurance Act do?
It provides immediate, no-fault relief to people harmed by an accident involving hazardous substances, meaning a defined support that does not require victims to first prove negligence. It is designed to get relief to those affected quickly.
Is the statutory cover enough on its own?
No. It is a floor, not a full programme. It does not rebuild your plant, meet your injured workers' statutory dues, or settle the larger civil claims a serious incident can bring. It sits alongside fire and property cover, workmen's compensation, and wider public or commercial general liability.
Does property or fire cover pay for people harmed outside the plant?
Generally no. Fire and property cover answers for your own building, plant and stock. Harm to the public and the environment outside sits under liability cover, which is a separate matter doing a separate job.
Can a broker help a hazardous-industry business?
A broker's duty under IRDAI regulation is to you, the client, not the insurer, so a broker can help you put the required statutory cover and the wider stack in place, and, if an incident occurs, fight a complex claim on your behalf. That describes the effort put in, not a guaranteed outcome.
What happens when you talk to us
A 20-minute video call with a Growth Advisor — no obligation, and no quote pushed. It opens with a five-minute video from our founder on how the benefits stack works and why Ethika exists; the rest is your questions. You’ll leave with an honest read on your current cover and claims experience, and a straight answer on whether we can genuinely help — even if you never become a client.
20 minutes with a Growth Advisor. No obligation.
A note on this page. Everything here is general information, not insurance, legal, financial or tax advice, and nothing is an offer. Whether your operation falls within the Public Liability Insurance Act, 1991, and what cover it requires, depends on the substances and quantities you handle and should be confirmed with qualified counsel. Other cover depends on your own policy wording. For advice about your situation, talk to us. The Visakhapatnam refinery incident is referenced from news reports of 2–3 November 2026.