{"id":1668,"date":"2021-12-07T11:36:54","date_gmt":"2021-12-07T06:06:54","guid":{"rendered":"https:\/\/www.plancover.com\/insurance\/?post_type=glossary&#038;p=1668"},"modified":"2025-04-16T16:07:10","modified_gmt":"2025-04-16T10:37:10","slug":"act-only-policy","status":"publish","type":"glossary","link":"https:\/\/www.plancover.com\/insurance\/glossary\/act-only-policy\/","title":{"rendered":"Act only policy"},"content":{"rendered":"\n<p>An <strong>Act Only Policy<\/strong> is the most basic form of motor insurance mandated by law under the <strong>Motor Vehicles Act, 1988<\/strong>. This policy provides <strong>legal liability coverage<\/strong> to the insured for any injury, death, or property damage caused to a <strong>third party<\/strong> due to an accident involving the insured\u2019s vehicle.<\/p>\n\n\n\n<p>This type of policy does <strong>not<\/strong> cover damage to the insured&#8217;s own vehicle or personal injuries to the policyholder. Its primary purpose is to ensure that <strong>third-party victims<\/strong> are compensated in the event of a mishap involving a vehicle.<\/p>\n\n\n\n<p><strong>Key Features:<\/strong><\/p>\n\n\n\n<ul>\n<li><strong>Mandatory by Law:<\/strong> It is compulsory for every motor vehicle owner in India to have at least an Act Only Policy.<\/li>\n\n\n\n<li><strong>Third-Party Coverage:<\/strong> Covers liabilities towards third parties including bodily injuries, death, and damage to third-party property.<\/li>\n\n\n\n<li><strong>Legal Compliance:<\/strong> Helps the vehicle owner comply with legal requirements under the Motor Vehicles Act.<\/li>\n\n\n\n<li><strong>No Own Damage Cover:<\/strong> Does not provide any financial support for damages to the insured\u2019s own vehicle.<\/li>\n\n\n\n<li><strong>Affordability:<\/strong> Being a basic plan, the premium is generally lower than comprehensive policies.<\/li>\n<\/ul>\n\n\n\n<p><strong>Who Should Opt For It:<\/strong><\/p>\n\n\n\n<ul>\n<li>Vehicle owners looking only for legal compliance without the need for extensive coverage.<\/li>\n\n\n\n<li>Fleet owners and commercial vehicle operators who already have internal risk management or self-insurance plans for own damages.<\/li>\n<\/ul>\n\n\n\n<p><strong>Real-World Example:<\/strong><\/p>\n\n\n\n<p>Suppose a delivery van owned by a small business accidentally collides with a pedestrian, causing injury. An Act Only Policy would cover the business\u2019s legal liability to pay compensation to the injured pedestrian but wouldn\u2019t pay for the repair of the van itself.<\/p>\n\n\n\n<p><strong>Limitations:<\/strong><\/p>\n\n\n\n<ul>\n<li>No protection for the insured\u2019s own vehicle.<\/li>\n\n\n\n<li>No add-on covers or customizations available.<\/li>\n\n\n\n<li>Limited scope of protection compared to comprehensive or bundled policies.<\/li>\n<\/ul>\n\n\n\n<p><strong>Why It Matters for Small Businesses:<\/strong><\/p>\n\n\n\n<p>For businesses operating vehicles, ensuring compliance with statutory insurance requirements through an Act Only Policy helps <strong>avoid legal penalties<\/strong>, while also offering <strong>financial protection<\/strong> against third-party claims. It&#8217;s often used as a <strong>cost-effective starting point<\/strong> for businesses before upgrading to wider coverage options.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>An Act Only Policy is the most basic form of motor insurance mandated by law under the Motor Vehicles Act, 1988. This policy provides legal liability coverage to the insured&#8230;<\/p>\n","protected":false},"author":2,"featured_media":0,"parent":0,"template":"","glossary-cat":[],"_links":{"self":[{"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/glossary\/1668"}],"collection":[{"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/users\/2"}],"version-history":[{"count":2,"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/glossary\/1668\/revisions"}],"predecessor-version":[{"id":4680,"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/glossary\/1668\/revisions\/4680"}],"wp:attachment":[{"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/media?parent=1668"}],"wp:term":[{"taxonomy":"glossary-cat","embeddable":true,"href":"https:\/\/www.plancover.com\/insurance\/wp-json\/wp\/v2\/glossary-cat?post=1668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}