In today’s business environment, even a single accident can lead to lawsuits, compensation demands, and reputational damage. That’s why public liability insurance (PLI) is considered a must-have for many businesses in India.
In 2025, with stricter compliance norms and rising customer awareness, IRDAI and state regulators are actively encouraging industries to adopt PLI. But the big question is: Which businesses must buy it?
What Is Public Liability Insurance?
Public liability insurance provides coverage against claims made by the public (third parties) due to:
- Bodily injury or death caused on your premises.
- Property damage caused by your business activities.
- Legal expenses related to court cases or settlements.
Example: A customer slips on a wet floor inside a supermarket and sues the owner. PLI covers the medical expenses and legal costs.
Businesses Legally Required to Buy PLI in India (2025)
- Factories Handling Hazardous Substances
- As per the Public Liability Insurance Act, 1991, companies dealing with toxic chemicals, flammable materials, or industrial gases must buy PLI.
- Example: Fertilizer plants, chemical manufacturers, paint factories.
- Hospitals & Healthcare Facilities
- With increasing malpractice and patient safety lawsuits, many hospitals must carry PLI to cover liability from accidents or negligence.
- Construction & Infrastructure Companies
- Construction sites often pose risks to laborers, passersby, and nearby property.
- Example: Metro rail projects, real estate builders.
- Hotels, Restaurants & Shopping Malls
- High footfall areas are prone to accidents like falls, food poisoning, or fire hazards.
- Event Management & Public Gatherings
- Concerts, fairs, and exhibitions are required to have liability cover due to crowd-related risks.
- Transport & Logistics Companies
- Required to cover risks of accidents, cargo damage, or third-party injury.
Who Else Should Consider It (Not Mandatory but Recommended)
- Startups in manufacturing (electronics, packaged food).
- Educational institutions (schools, coaching centers).
- Small businesses with retail shops.
Even if not mandatory, one accident without PLI can destroy years of business growth.
Benefits of Public Liability Insurance
- Legal Protection: Covers court fees and settlement costs.
- Financial Safety: Prevents sudden financial losses due to claims.
- Reputation Management: Clients and customers trust insured businesses more.
- Compliance: Ensures businesses meet IRDAI and statutory regulations.
Real-Life Example
In 2024, a paint factory in Gujarat faced a chemical leak incident. Workers and nearby residents were hospitalized, and compensation claims crossed ₹8 crore. Since the factory had a PLI policy, the insurer covered a large portion of the liability, preventing bankruptcy.
Why It Matters in 2025
- Industrial accidents and consumer lawsuits are rising in India.
- Government is pushing businesses to adopt risk transfer mechanisms.
- Businesses without PLI face hefty penalties, closures, and reputational loss.
Next, read: Fire Insurance Rules by IRDAI: 2025 Circular Explained
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