Savita got her Honda City car insured under Motor Comprehensive policy from ABC General Insurance Co. for the period from 1-6-2017 to 31-5-2018 for a value of ₹3.75 lakh. On 15-10-2017 she sold the car to Gautam. The car

The legal aspects of third-party motor insurance are now codified under the Motor Vehicles Act, 1988. The provisions are the pivot around which the entire insurance aspect of motor transport hinges. All the sections of the Act are inter-related and have to be examined thoroughly. Section 146 of Motor Vehicles Act prescribes the necessity for insurance against third party risks - no person can use a motor vehicle in a public place unless there is in force in relation to that motor vehicle, by that person or another, a policy of insurance. A vehicle carrying or meant to carry hazardous or dangerous goods should have a policy under the Public Liability Insurance Act, 1991 also. Section 146 seeks to protect the members of the public travelling in vehicles or using the roads (public places) from the financial liability caused by risk attendant upon the use of the motor vehicle. The third-party (TP) car cover serves to protect the insured from claims arising from a third party, when the insured person's vehicle is at fault. This cover will pay for any fiscal liability that arises out of the accident. As per the rules, no vehicle can run on the road without TP insurance. Based on the capacity of the car or two-wheeler, the third-part premium rate is fixed and notified by IRDAI at the start of a financial year. Elsewhere, an Own Damage (OD) or a Comprehensive Policy cover covers loss or damage to the vehicle insured in addition to all the covers provided by a third-party policy. For new buyers, there will be three options to choose from - Buy a long-term package, a bundled package, or stick to a standalone TP cover. Here is a closer look at each of these options: Option 1. Long-Term Package Cover: (TP=3 Years Plus OD=3 Years) Such a cover will offer both motor third-party insurance and own damage insurance for three years or five years, as the case may be. Option 2. Bundled Cover: (TP=3 Years Plus OD=1 Years) Such a cover will offer a three-year or five-year term (as applicable) for the third-party component and a one-year term for Own Damage. Option 3. Standalone Third-Party Only cover: (TP=3 Years without OD) This option always existed for anyone buying motor insurance. The only change is that now one has to purchase TP for 3 or 5 years, as the case may be. Exemptions: The provisions relating to compulsory for third party insurance do not apply to any vehicle owned by the Central Govt. or State Govt. and used for Govt. purposes unconnected to any commercial enterprises. The Govt. has been given the power to grant an exemption to any vehicle owned by The Central Govt. or the State Govt. if the vehicle is used for Govt. purposes unconnected with any commercial activity; Any local authority Any state transport undertaking.