History
Widespread use of the automobile began after the First World War in the cities. Cars were relatively fast and dangerous by that stage, yet there was still no compulsory form of car insurance anywhere in the world. This meant that injured victims would seldom get any compensation in an accident, and drivers often faced considerable costs for damage to their car and property.
A compulsory car insurance scheme was first introduced in the United Kingdom with the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road. Germany enacted similar legislation in 1939.
Public policies
In many jurisdictions it is compulsory to have vehicle insurance before using or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver, however the degree of each varies greatly.
Several jurisdictions have experimented with a "pay-as-you-drive" insurance plan which is paid through a gasoline tax (petrol tax). This would address issues of uninsured motorists and also charge based on the miles (kilometers) driven, which could theoretically increase the efficiency of the insurance, through streamlined collection.[1]
Australia
In Australia, Compulsory Third Party Personal Injury Insurance (CTP) is a state-based scheme that covers only personal injury liability. Comprehensive and Third Party Property Insurance is sold separately to cover property damage additionally, and can include fire, theft, collision, and other property damage. Third Party Property Insurance covers damage to third-party property and vehicles, but not the insured vehicle. Third Party Property Insurance with Fire and Theft additionally covers the insured vehicle against fire and theft. Comprehensive Insurance covers damage to third-party and the insured property and vehicle.
CTP
Compulsory Third Party Personal Injury (CTP) Insurance is linked to the registration of a vehicle. It is transferred when a vehicle already registered is sold. It covers the vehicle owner and any person who drives the vehicle against claims for liability in respect of the death or injury to people caused by the fault of the owner or driver, but not for damage. It covers the cost of all reasonable medical treatment for injuries received in the accident, loss of wages, cost of care services, and in some cases compensation for pain and suffering.
In New South Wales and the Northern Territory CTP Insurance is compulsory; each vehicle must be insured when registered. A 'Greenslip,'[2] another name by which CTP Insurance is commonly known due to the colour of the form, must be obtained through one of the five licensed insurers in New South Wales. Suncorp and Allianz both hold two licences to issue CTP Greenslips – Suncorp under the GIO and AAMI licences and Allianz under the Allianz and CIC/Allianz licences. The remaining three licences to issue CTP Greenslips are held by QBE, Zurich and Insurance Australia Limited (NRMA). APIA and Shannons and InsureMyRide Insurance also supply CTP insurance licensed by GIO. In addition to the Greenslip, an additional car insurance can be purchased through insurers in Australia. This will cover claims that the standard CTP insurance cannot provide. This is known as a comprehensive car insurance.
A similar scheme applies in the Australian Capital Territory through AAMI, GIO and NRMA (IAL).
In Victoria, Third Party Personal insurance from the Transport Accident Commission is similarly included, through a levy, in the vehicle registration fee. A similar scheme exists inTasmania through the Motor Accidents Insurance Board.
In Queensland, CTP is a mandatory part of registration for a vehicle. There is choice of insurer but price is government controlled in a tight band.
In South Australia, Third Party Personal insurance from the Motor Accident Commission is included in the licence registration fee for people over 17. A similar scheme applies inWestern Australia.
Canada
Several Canadian provinces (British Columbia, Saskatchewan, Manitoba and Quebec) provide a public auto insurance system
while in the rest of the country insurance is provided privately. Basic
auto insurance is mandatory throughout Canada with each province's
government determining which benefits are included as minimum required
auto insurance coverage and which benefits are options available for
those seeking additional coverage. Accident benefits coverage is
mandatory everywhere except for Newfoundland and Labrador. All provinces in Canada have some form of no-fault insurance available
to accident victims. The difference from province to province is the
extent to which tort or no-fault is emphasized. International drivers
entering Canada are permitted to drive any vehicle their licence allows
for the 3-month period for which they are allowed to use their
international licence. International laws provide visitors to the
country with an International Insurance Bond (IIB) until this 3-month
period is over in which the international driver must provide themselves
with Canadian Insurance. The IIB is reinstated every time the
international driver enters the country. Damage to the driver's own
vehicle is optional – one notable exception to this is in Saskatchewan, where SGI provides collision coverage (less than a $1000 deductible, such as a collision damage waiver)
as part of its basic insurance policy. In Saskatchewan, residents have
the option to have their auto insurance through a tort system but less
than 0.5% of the population have taken this option.[3]
Germany
Since
1939, it has been compulsory to have third party personal insurance
before keeping a motor vehicle in all federal states of Germany. In
addition, every vehicle owner is free to take out a comprehensive
insurance policy. All types of car insurances are provided by several
private insurers. The amount of insurance contribution is determined by
several criteria, like the region, the type of car or the personal way
of driving.
The
minimum coverage defined by German law for car liability insurance /
third party personal insurance is: 7.5 million euro for bodily injury
(damage to people), 1 million euro for property damage and 50,000 euro
for financial/fortune loss which is in no direct or indirect coherence
with bodily injury or property damage. Insurance companies usually offer
all-in/combined single limit insurances of 50 Million Euro or 100
Million Euro (about 141 Million Dollar) for bodily injury, property
damage and other financial/fortune loss (usually with a bodily injury
coverage limitation of 8 to 15 million euro for EACH bodily injured
person).
Hungary
Third-party
vehicle insurance is mandatory for all vehicles in Hungary. No
exemption is possible by money deposit. The premium covers all damage up
to HUF 500M (about €1.8M) per accident without deductible. The coverage is extended to HUF 1,250M
(about €4.5M) in case of personal injuries. Vehicle insurance policies
from all EU-countries and some non-EU countries are valid in Hungary
based on bilateral or multilateral agreements. Visitors with vehicle
insurance not covered by such agreements are required to buy a monthly,
renewable policy at the border.[4]
Indonesia
Third-party
vehicle Insurance is a mandatory requirement in Indonesia and each
individual car and motorcycle must be insured or the vehicle will not be
considered legal. Therefore, a motorist cannot drive the vehicle until
it is insured. Third Party vehicle insurance is included through a levy
in the vehicle registration fee which is paid to government institution
that known as "Samsat". Third-Party Vehicle Insurance is regulated under
Act No. 34 Year 1964 Re: Road Traffic Accident Fund and merely covers
Bodily injury, and managed by a SOE named PT. Jasa Raharja (Persero).[5]
India[edit]
Auto
Insurance in India deals with the insurance covers for the loss or
damage caused to the automobile or its parts due to natural and man-made
calamities. It provides accident cover for individual owners of the vehicle while driving and also for passengers and third party legal liability. There are certain general insurance companies who also offer online insurance service for the vehicle.
Auto
Insurance in India is a compulsory requirement for all new vehicles
used whether for commercial or personal use. The insurance companies
have tie-ups with leading automobile manufacturers. They offer their
customers instant auto quotes. Auto premium is determined by a number of
factors and the amount of premium increases with the rise in the price
of the vehicle. The claims of the Auto Insurance in India can be
accidental, theft claims or third party claims. Certain documents are
required for claiming Auto Insurance in India, like duly signed claim
form, RC copy of the vehicle, Driving license copy, FIR copy, Original
estimate and policy copy.
There are different types of Auto Insurance in India :
Private
Car Insurance – In the Auto Insurance in India, Private Car Insurance
is the fastest growing sector as it is compulsory for all the new cars.
The amount of premium depends on the make and value of the car, state
where the car is registered and the year of manufacture.
Two
Wheeler Insurance – The Two Wheeler Insurance under the Auto Insurance
in India covers accidental insurance for the drivers of the vehicle. The
amount of premium depends on the current showroom price multiplied by
the depreciation rate fixed by the Tariff Advisory Committee at the time
of the beginning of policy period.
Commercial
Vehicle Insurance – Commercial Vehicle Insurance under the Auto
Insurance in India provides cover for all the vehicles which are not
used for personal purposes, like the Trucks and HMVs. The amount of
premium depends on the showroom price of the vehicle at the commencement
of the insurance period, make of the vehicle and the place of
registration of the vehicle. The auto insurance generally includes:
- Loss or damage by accident, fire, lightning, self ignition, external explosion, burglary, housebreaking or theft, malicious act.
- Liability for third party injury/death, third party property and liability to paid driver
- On payment of appropriate additional premium, loss/damage to electrical/electronic accessories
The auto insurance does not include:
- Consequential loss, depreciation, mechanical and electrical breakdown, failure or breakage
- When vehicle is used outside the geographical area
- War or nuclear perils and drunken driving.
Ireland[edit]
The
Road Traffic Act, 1933 requires all drivers of mechanically propelled
vehicles in public places to have at least third-party insurance, or to
have obtained exemption – generally by depositing a (large) sum of money
with the High Court as a guarantee against claims. In 1933 this figure
was set at £15,000.[6] The Road Traffic Act, 1961[7] (which is currently in force) repealed the 1933 act but replaced these sections with functionally identical sections.
From
1968, those making deposits require the consent of the Minister for
Transport to do so, with the sum specified by the Minister.
Those
not exempted from obtaining insurance must obtain a certificate of
insurance from their insurance provider, and display a portion of this
(an insurance disc) on their vehicles windscreen (if fitted).[citation needed] The
certificate in full must be presented to a police station within ten
days if requested by an officer. Proof of having insurance or an
exemption must also be provided to pay for the motor tax.[citation needed]
Those
injured or suffering property damage/loss due to uninsured drivers can
claim against the Motor Insurance Bureau of Ireland's uninsured drivers
fund, as can those injured (but not those suffering damage or loss) from
hit and run offences.
Italy[edit]
The
law 990/1969 requires that each motor vehicle or trailer standing or
moving in a public road to have a third party insurance (called RCA, Responsabilità civile per gli autoveicoli).
Historically, a part of the certificate of insurance must be displayed
on the windscreen of the vehicle. This latter disposition was revoked in
2015, when a national database of insured vehicles was built by the
Insurance Company Association (ANIA, Associazione Nazionale Imprese Assicuratrici) and the National Trasportation Authority (Motorizzazione Civile)
to verify (by private citizens and public authorities) if a vehicle is
insured. There is no exemption policy to this law disposition.
Police
forces have the power to seize vehicles that do not have the necessary
insurance in place, until the owner of the vehicle pays the fine and
sign a new insurance policy. Driving without the necessary insurance for
that vehicle is an offence that will be prosecuted by the police and
will receive penalty ranging from 841 to 3,287 euro. Same provision is
applied when the vehicle is standing on public road.
The
minimal insurance policies covers only third parties (included the
insured person and third parties carried with the vehicle, but not the
driver, if the two do not coincide). Also the third parties, fire and
theft are common insurance policies, while the all inclusive policies (kasko policy)
which include also damages of the vehicle causing the accident or the
injuries. It is also common to include a renounce clause of the
insurance company to compensate the damages against the insured person
in some cases (usually in case of DUI or other infringement of the law
by the driver).
The victims of accident caused by non-insured vehicles could be compensated by the Road's Victim Warranty Fund (Fondo garanzia vittime della strada), which is covered by a fixed amount (2.5%, as 2015) of each RCA insurance premium.
New Zealand[edit]
Within New Zealand, the Accident Compensation Corporation (ACC) provides nationwide no-fault personal injury insurance.[8] Injuries
involving motor vehicles operating on public roads are covered by the
Motor Vehicle Account, for which premiums are collected through levies
on petrol and through vehicle licensing fees.[9]
Norway
In
Norway, the vehicle owner must provide the minimum of liability
insurance for his vehicle(s) – of any kind. Otherwise, the vehicle is
illegal to use. If a person drives a vehicle belonging to someone else,
and has an accident, the insurance will cover for damage done.
Romania
Romanian law mandates Răspundere Auto Civilă, a motor-vehicle liability insurance for all vehicle owners to cover damages to third parties.[10]
Russian Federation
Motor-vehicle insurance is mandatory for all owners according to Russian legislation.
South Africa
South Africa allocates a percentage of the money from gasoline into the Road Accident Fund, which goes towards compensating third parties in accidents.
United Arab Emirates
When
buying car insurance in the United Arab Emirates, traffic department
require a 13-month insurance certificate each time you register or renew
a vehicle registration.
United Kingdom
In
1930, the UK government introduced a law that required every person who
used a vehicle on the road to have at least third-party personal injury
insurance. Today, this UK law is defined by the Road Traffic Act 1988,[13] (generally
referred to as the RTA 1988 as amended) which was last modified in
1991. The Act requires that motorists either be insured, or have made a
specified deposit (£500,000
in 1991) and keeps the sum deposited with the Accountant General of the
Supreme Court, against liability for injuries to others (including
passengers) and for damage to other persons' property, resulting from
use of a vehicle on a public road or in other public places.
It
is an offence to use a motor vehicle, or allow others to use it without
insurance that satisfies the requirements of the Act. This requirement
applies while any part of a vehicle (even if a greater part of it is on
private land) is on the public highway. No such legislation applies on
private land. However, private land to which the public have a
reasonable right of access (for example, a supermarket car park during
opening hours) is considered to be included within the requirements of
the Act.
Police
have the power to seize vehicles that do not appear to have necessary
insurance in place. A driver caught driving without insurance for the
vehicle he/she is in charge of for the purposes of driving, is liable to
be prosecuted by the police and, upon conviction, will receive either a
fixed penalty or magistrate's courts penalty.
The
registration number of the vehicle shown on the insurance policy, along
with other relevant information including the effective dates of cover
are transmitted electronically to the UK's Motor Insurance Database
(MID) which exists to help reduce incidents of uninsured driving in the
territory. The Police are able to spot-check vehicles that pass within
range of automated number plate recognition (ANPR) cameras, that can
search the MID instantly. It should be noted, however, that proof of
insurance lies entirely with the issue of a Certificate of Motor
Insurance, or cover note, by an Authorised Insurer which, to be valid,
must have been previously 'delivered' to the insured person in
accordance with the Act, and be printed in black ink on white paper.
The
insurance certificate or cover note issued by the insurance company
constitutes the only legal evidence that the policy to which the
certificate relates satisfies the requirements of the relevant law
applicable in Great Britain, Northern Ireland, the Isle of Man, the
Island of Guernsey, the Island of Jersey and the Island of Alderney. The
Act states that an authorised person, such as a police officer, may
require a driver to produce an insurance certificate for inspection. If
the driver cannot show the document immediately on request, and evidence
of insurance cannot be found by other means such as the MID, then the
Police are empowered to seize the vehicle instantly.
The
immediate impounding of an apparently uninsured vehicle replaces the
former method of dealing with insurance spot-checks where drivers were
issued with an HORT/1 (so-called because the order was form number 1
issued by the Home Office Road Traffic dept). This 'ticket' was an order
requiring that within seven days, from midnight of the date of issue,
the driver concerned was to take a valid insurance certificate (and
usually other driving documents as well) to a police station of the
driver's choice. Failure to produce an insurance certificate was, and
still is, an offence. The HORT/1 was commonly known – even by the
issuing authorities when dealing with the public – as a "Producer". As
these are seldom issued now and the MID relied upon to indicate the
presence of insurance or not, it is incumbent upon the insurance
industry to accurately and swiftly update the MID with current policy
details and insurers that fail to do so can be penalised by their
regulating body. The MID provide a free online facility for motorists
the check the current insurance status of their own vehicles at
www.askmid.com
Vehicles
kept in the UK must now be continuously insured. This requirement arose
following a change in the law in June 2011 when a regulation known as
Continuous Insurance Enforcement (CIE) came into force. The effect of
this was that in the UK a vehicle must have a valid insurance policy in
force whether or not it is kept on public roads and whether or not it is
driven.[14]
Insurer, and Vehicle Excise Duty (VED) / licence data,
are shared by the relevant authorities including the Police and this
forms an integral part of the mechanism of CIE. All UK registered
vehicles, including those that are exempt from VED (for example,
Historic Vehicles and cars with low or zero emissions) are subject to
the VED taxation application process. Part of this is a check on the
vehicle's insurance. A physical receipt for the payment of VED was
issued by way of a paper disc which, prior to 1 October 2014, meant that
all motorists in the UK were required to prominently display the tax
disc on their vehicle when it was kept or driven on public roads. This
helped to ensure that most people had adequate insurance on their
vehicles because insurance cover was required to purchase a disc,
although the insurance must merely have been valid at the time of
purchase and not necessarily for the life of the tax disc.[15] To
address the problems that arise where a vehicle's insurance was
subsequently cancelled but the tax disc remained in force and displayed
on the vehicle and the vehicle then used without insurance, the CIE
regulations are now able to be applied as the Driver & Vehicle
Licence Authority (DVLA) and the MID databases are shared in real-time
meaning that a taxed but uninsured vehicle is easily detectable by both
authorities and Traffic Police. Post 1 October 2014 it is no longer a
requirement to display a vehicle excise licence (tax disc) on a vehicle.[16] This
has come about because the whole VED process can now be administered
electronically and alongside the MID, doing away with the expense, to
the UK Government, of issuing paper discs.
If
a vehicle is to be "laid up" for whatever reason, a Statutory Off Road
Notification (SORN) must be submitted to the DVLA to declare that the
vehicle is off the public roads and will not return to them unless SORN
is cancelled by the vehicle's owner. Once a vehicle has been declared
'SORN' then the legal requirement to insure it ceases, although many
vehicle owners may desire to maintain cover for loss of or damage to the
vehicle while it is off the road. A vehicle that is then to be put back
on the road must be subject to a new application for VED and be
insured. Part of the VED application requires an electronic check of the
MID, in this way the lawful presence of a vehicle on the road for both
VED and insurance purposes is reinforced. It follows that the only
circumstances in which a vehicle can have no insurance is if it has a
valid SORN; was exempted from SORN (as untaxed on or before 31/10/1998
and has had no tax or SORN activity since); is recorded as 'stolen and
not recovered' by the Police; is between registered keepers; or is
scrapped.
Road Traffic Act Only Insurance differs from Third Party Only Insurance (detailed
below) and is not often sold, unless to underpin, for example, a
corporate body wishing to self-insure above the requirements of the Act.
It provides the very minimum cover to satisfy the requirements of the
Act. Road Traffic Act Only Insurance has
a limit of £1,000,000 for damage to third party property, while third
party only insurance typically has a greater limit for third party
property damage.
Motor
insurers in the UK place a limit on the amount that they are liable for
in the event of a claim by third parties against a legitimate policy.
This can be explained in part by the Great Heck Rail Crash that
cost the insurers over £22 million in compensation for the fatalities
and damage to property caused by the actions of the insured driver of a
motor vehicle that caused the disaster. No limit applies to claims from
third parties for death or personal injury, however UK car insurance is
now commonly limited to £20m for any claim or series of claims for loss
of or damage to third party property caused by or arising out of one
incident.
The minimum level of insurance cover generally available, and which satisfies the requirement of the Act, is called third party only insurance. The level of cover provided by Third party only insurance is
basic, but does exceed the requirements of the act. This insurance
covers any liability to third parties, but does not cover any other
risks.
More commonly purchased is third party, fire and theft.
This covers all third party liabilities and also covers the vehicle
owner against the destruction of the vehicle by fire (whether malicious
or due to a vehicle fault) and theft of the insured vehicle. It may or
may not cover vandalism. This kind of insurance and the two preceding
types do not cover damage to the vehicle caused by the driver or other
hazards.
Comprehensive insurance covers
all of the above and damage to the vehicle caused by the driver
themselves, as well as vandalism and other risks. This is usually the
most expensive type of insurance. Interestingly, it is custom in the UK
for insurance customers to refer to their Comprehensive Insurance as
"Fully Comprehensive" or popularly, "Fully Comp". This is a tautology as
the word 'Comprehensive' means full.
Some
classes of vehicle ownership, or use, are "Crown Exempt" from the
requirement to be covered under the Act including vehicles owned or
operated by certain councils and local authorities, national park
authorities, education authorities, police authorities, fire
authorities, health service bodies, the security services and vehicles
used to or from Shipping Salvage purposes. Although exempt from the
requirement to insure this provides no immunity against claims being
made against them, so an otherwise Crown Exempt authority may chose to
insure conventionally, preferring to incur the known expense of
insurance premiums rather than accept the open-ended exposure of
effectively, self-insuring under Crown Exemption.
The Motor Insurers' Bureau (MIB)
compensates the victims of road accidents caused by uninsured and
untraced motorists. It also operates the MID, which contain details of
every insured vehicle in the country and acts as a means to share
information between Insurance Companies.
Soon
after the introduction of the Road Traffic Act in 1930, unexpected
issues arose when motorists needed to drive a vehicle other than their
own in genuine emergency circumstances. Volunteering to move a vehicle,
for example, where another motorist had been taken ill or been involved
in a accident, could lead to the 'assisting' driver being prosecuted for
no insurance if the other car's insurance did not cover use by any
driver. To alleviate this situation an extension to UK Car Insurances
was introduced allowing a Policyholder to personally drive any other
motor car not belonging to him/her and not hired to him/her under a hire
purchase or leasing agreement. This extension of cover, known as
"Driving Other Cars" (where it is granted) usually applies to the
Policyholder only. The cover provided is for Third Party Risks only and
there is absolutely no cover for loss of or damage to the vehicle being
driven. This aspect of UK motor insurance is the only one that purports
to cover the driving of a vehicle, not use.
On
1 March 2011 the European Court of Justice in Luxembourg ruled that
gender could no longer be used by insurers to set car insurance
premiums. The new ruling will come into action from December 2012.
Investigation into repair costs & fraudulent claims
In
September 2012 it was announced that the Competition Commission had
launched an investigation into the UK system for credit repairs and
credit hire of an alternative vehicle leading to claims from third
parties following an accident. Where their client is considered to be
not at fault, Accident Management Companies will take over the running
of their client's claim and arrange everything for them, usually on a
'No Win - No Fee' basis. It was shown that the insurers of the at-fault
vehicle, were unable to intervene in order to have control over the
costs that were applied to the claim by means of repairs, storage,
vehicle hire, referral fees and personal injury. The subsequent cost of
some items submitted for consideration has been a cause for concern over
recent years as this has caused an increase in the premium costs,
contrary to the general duty of all involved to mitigate the cost of
claims. Also, the recent craze of "Cash for crash" has substantially
raised the cost of policies. This is where two parties arrange a
collision between their vehicles and one driver making excessive claims
for damage and non existent injuries to themselves and the passengers
that they had arranged to be "in the vehicle" at the time of the
collision. Another recent development has seen crashes being caused
deliberately by a driver "slamming" on their brakes so that the driver
behind impacts them, this is usually carried out at roundabout
junctions, when the following driver is looking to the right for
oncoming traffic and does not notice that the vehicle in front has
suddenly stopped for no reason. The 'staging' of a motor collision on
the Public Highway for the purpose of attempting an insurance fraud is
considered by the Courts to be organised crime and upon conviction is
dealt with as such.
United States
Main article: Vehicle insurance in the United States
The
regulations for vehicle insurance differ with each of the 50 US states
and other territories, with each U.S. state having its own mandatory
minimum coverage requirements (see separate main article). Each
of the 50 U.S. states and the District of Columbia requires drivers to
have insurance coverage for both bodily injury and property damage, but
the minimum amount of coverage required by law varies by state. For
example, minimum bodily injury liability coverage requirements range
from $20,000 in Florida to $100,000 in Alaska and Maine, while minimum property damage liability requirements range from $5,000 (four states) to $25,000 (16 states).