Page 20 - Motor Insurance Ebook IC 72

The Insurance Times

party policy is compulsory for the use of the vehicle in a
public place

As per the provisions of Motor Vehicle Act in case of
an accident caused or arisen out of the use of the vehicle
in a public place, resulted in personal injury or death or
damage to third party property, the insured has a legal
liability. He may suffer financial loss if he incurs such
liability. This entitles the owner to insure his vehicle
against third party risk.

Even if the vehicle is not driven by the insured himself
but by some one on his behalf or by a paid driver, (subject
to policy terms and condition) in case of any accident
the owner becomes vicariously liable to third party for
the negligent act. This entitles the owner to insure his
vehicle against third party risk.

Indemnity: Insurance contract is otherwise known as
contract of indemnity. The principle of indemnity
prevents the insured from making a profit out of a loss.

When a loss arises under an insurance policy, the loss
must be made good in such a manner that financially
the insured is neither better off nor worse off as the
result of the loss. The object of this principle is to place
the insured after a loss in the same pecuniary position

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