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    Question

    What is the purpose of the Motor Vehicles Act, 1988

    with respect to insurance?
    A To regulate the functioning of insurance companies in India Correct Answer Incorrect Answer
    B To make third-party liability insurance mandatory for all motor vehicles in India Correct Answer Incorrect Answer
    C To provide financial assistance to accident victims Correct Answer Incorrect Answer
    D To promote the growth of the insurance sector in India Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The Motor Vehicles Act, 1988 makes third-party liability insurance mandatory for all motor vehicles in India. Third-party insurance covers the policyholder against any liability arising from injuries or damages caused to a third-party in case of an accident. The insurance covers the liability of the policyholder towards third parties, but not the policyholder's own damages. The purpose of the Act is to ensure that victims of road accidents are provided with adequate compensation and that the responsibility of the person causing the accident is established. Hence, option B is correct.

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