Licentiate Examination - IC 11 - Practice of General Insurance Exam - Important Points
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Third Party Insurance - Purchased by the insured (first party) from an insurance company (second party) for protection against another party's claims (third party) for liability arising out of the action of the insured
Act [Liability] Only Policy: As per Motor Vehicles Act it is mandatory for any vehicle plying in public place to insure liabilities towards third parties.
Act [Liability] Only Policy only covers the vehicle owner's legal liability to pay compensation for: (1) Third party bodily injury or death (2) Third party property damage
Package Policy / Comprehensive Policy: (Own damage + Third party liability) - loss or damage to the vehicle insured by specified perils (known as own damage to motor vehicles) is also covered subject to the IDV. Some of these perils are fire, theft, riot and strike, earthquake, flood, accident etc.
The sum insured of a vehicle in a Motor Policy is referred to as Insured's Declared Value (I.D.V.). Rating / premium calculation depends on factors like the Insured's Declared Value, cubic capacity, geographical zone, age of the vehicle etc.
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