ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Liability insurance is an insurance policy that provides coverage for the cost of losses the insured causes to another party or their property. Such policies cover the legal costs, medical bills, and other expenses the insured is liable to pay for the damages.

Detailed explanation-2: -Your liability insurer will pay damages that you are legally obligated to pay as a result of “bodily injury, ” “property damage” or “personal and advertising injury, ” up to the policy limits and subject to your deductible. Punitive damages are generally not covered, although there may be some exceptions.

Detailed explanation-3: -An example would be, if a product manufacturer sells products that have been faulty or causes damage to other’s products, then he/she may be sued for the damages caused. Procuring a liability insurance will cover the manufacturer from ensuing legal costs.

Detailed explanation-4: -Liability to third parties bodily injury and or death and property damage. Personal accident cover for the owner driver for a specified sum insured.

Detailed explanation-5: -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.