A 'liability only' insurance policy is the minimum cover that a car owner needs to have throughout the ownership of the vehicle. It covers death or bodily injury to a third person or damage to the property of a third person caused by the insured vehicle. This policy does not cover damage to the insured person's own car. The maximum amount that the insurance company is bound to pay for damage to a third party's property will be limited by the cover taken. In case of personal injury or death, there is no such limit and the insurance company may be bound to pay a compensation that may include medical expenses, loss of income and loss of capacity to earn.

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