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: -Property/casualty insurance. covers property exposures such as direct and indirect losses of property caused by perils like fire, windstorm, and theft. It also includes insurance to cover the possibility of being held legally liable to pay damages to another person.

Detailed explanation-3: -Liability Insurance is the insurance called that serves as a benefit payable on behalf of a covered party who is legally responsible for unintentionally harming others or their party.

Detailed explanation-4: -Personal umbrella insurance policy in action Here’s an example of how a personal umbrella policy works: If you’re at fault in a car accident that injures another driver, your regular auto insurance may cover the other driver up to the limit you selected, say $250, 000.