BANKING AFFAIRS

Detailed explanation-1: -Third-party insurance, which is also sometimes referred to as ‘act-only’ insurance is a statutory requirement for all vehicle owners as per the Motor Vehicle Act.

Detailed explanation-2: -First-party insurance covers the damages or losses caused to the policyholder or his/her vehicle. The damages can be sustained during riots, strikes, earthquakes, floods, fire, theft etc. Third-party insurance covers damages or losses caused only to the third party due to an accident.

Detailed explanation-3: -When the third party raises a claim against the insured with respect to an event that has been insured, the insurer undertakes to pay the damages. If the insured is insolvent, then all the rights that he holds in relation to the insurer will be transferred and vested to the third party in the same power.

Detailed explanation-4: -Yes, third party motor insurance is mandatory for two-wheelers and four-wheelers in the country. This mandate has been set by The Motor Vehicles Act, 1988.

Detailed explanation-5: -First-party refers to the insured individual, second-party is the insurance provider, and third party is the person towards whom damages are owed by the first-party in an accident.