Insurance is a contract, recognised by the law, in which the insurer undertakes to run the risk to a pre-specified extent, subject to terms, conditions and warrantees and pays compensation for an agreed consideration to the insured / owner of the property on the happening of the event insured against.
Unique Contract: Insurance of motor vehicle is unique as it combines in itself damage to insured motor vehicle and insurance against liability towards damage to third party property and / or any personal injury / death sustained by third party or passengers or persons in employment as described in the policy or arising out of the use of the insured property.
The Motor Vehicles Act was passed in 1939 introducing the law relating to compulsory third party insurance in India.
The Motor Vehicles Act, 1988 (Act No. 59 of 1988) has replaced the earlier 1939 Act, and it became effective from 1st July 1989.
A motor insurance contract has all the ingredients of general contract in respect of insureds duty to disclose material facts and insureds right to insure any legal interest, legal liability or damage to third party property, besides insurer is bestowed with the duty to indemnify and as a corollary accrues right of subrogation and contribution.
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