The scheme provides motor vehicle owners with an insurance policy that covers their unlimited liability for personal injury caused by, through or in connection with directly driving the insured motor vehicle in incidents to which the Motor Vehicle (Third Party Insurance) Act 1943 applies.
For the injured third party it provides access to common law, that is, the injured person has a right to approach a law court to seek monetary compensation from the person 'at fault' for the personal injury and other related losses.
As a fault based scheme it requires proof of liability, i.e. the injured party must be able to establish negligence against an owner or driver of a motor vehicle. Consequently, circumstances can arise where, for example, a driver who is wholly at fault in a crash cannot obtain compensation because there is no negligent party against whom a claim can be made.