ECONOMICS (CBSE/UGC NET)

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. It is a type of insurance cover where the insurer offers protection against damage to the third-party vehicle, personal property and physical injury.

Detailed explanation-2: -Liability Only Policy covers any legal liability you may face that occurs out of damage or loss to a third party only-including death, injury, and/or property damage in the event of an accident that involves your insured vehicle. This is following the stipulations laid out by the Motor Vehicles Act, 1988 .

Detailed explanation-3: -Own damage car insurance provides compensation against any own damages sustained by the insured car due to an unforeseen event like an accident, earthquake, theft, riot, fire, etc. This policy can only be purchased if you have an existing third party liability car policy.

Detailed explanation-4: -Third-party insurance is compulsory for all vehicle-owners as per the Motor Vehicles Act. It covers only your legal liability for the damage you may cause to a third party – bodily injury, death and damage to third party property – while using your vehicle. TP cover does not pay for repair of damage to your vehicle.

Detailed explanation-5: -Limit of liability refers to the max amount of money your insurer is on the hook for if something bad happens to you, your stuff, or your property.