Vehicle insurance
Vehicle insurance is insurance for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bodily injury resulting from traffic collisions and against liability that could also arise from incidents in a vehicle. Vehicle insurance may additionally offer financial protection against theft of the vehicle, and against damage to the vehicle sustained from events other than traffic collisions, such as vandalism, weather or natural disasters, and damage sustained by colliding with stationary objects. The specific terms of vehicle insurance vary with legal regulations in each region.
History
Widespread use of the motor car began after the First World War in urban areas. 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 rarely get any compensation in a crash, and drivers often faced considerable costs for damage to their car and property.A compulsory car insurance scheme was 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 while their vehicle was being used on a public road. Ireland replicated the obligation via the Road Traffic Act, 1933. Germany enacted similar legislation in 1939 called the "Act on the Implementation of Compulsory Insurance for Motor Vehicle Owners". The EU required mandatory insurance cover be mandated by all member states, from 1973.
Public policies
In most 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 utilizes either a tracking device in the vehicle or vehicle diagnostics. This could address issues of uninsured motorists by providing additional options and also charge based on the distance driven, which could theoretically increase the efficiency of the insurance, through streamlined collection.
Australia
In Australia, every state has its own Compulsory Third-Party insurance scheme. CTP covers only personal injury liability in a vehicle crash. Comprehensive and Third-Party Property Damage, with or without Fire and Theft insurance, are sold separately.- Comprehensive insurance covers damages to third-party vehicles, other third-party property and the insured vehicle.
- Third-Party Property Damage insurance covers damage to third-party property and vehicles, but not the insured vehicle.
- Third-Party Property Damage with Fire and Theft insurance covers the insured vehicle against fire and theft as well as damage to third-party property and vehicles.
Compulsory Third-Party Insurance
Third-Party Property insurance or Comprehensive insurance covers the third party with the repairing cost of the vehicle, any property damage or medication expenses as a result of a crash by the insured. They are not to be confused with Compulsory Third-Party insurance, which is for injuries or death of someone in a motor crash.
In New South Wales, each vehicle must be insured before it can be registered. It is often called a 'greenslip', because of its colour. There are five licensed CTP insurers in New South Wales. Suncorp holds licences for GIO and AAMI and Allianz holds one licence. The remaining two licences are held by QBE and NRMA Insurance. APIA and Shannons and InsureMyRide insurance also supply CTP insurance licensed by GIO.
A privately provided scheme also applies in the Australian Capital Territory through AAMI, APIA, GIO and NRMA. Vehicle owners pay for CTP as part of their vehicle registration.
In Queensland, CTP is included in the registration fee for a vehicle. There is a choice of private insurer – Allianz, QBE and Suncorp and price is government controlled.
In South Australia, since July 2016, CTP is no longer provided by the Motor Accident Commission. The government has now licensed four private insurers – AAMI, Allianz, QBE and SGIC – to offer CTP insurance SA. Since July 2019, vehicle owners can choose their own CTP insurer and new insurers may also enter the market.
There are three states and one territory that do not have a private CTP scheme. In Victoria, the Transport Accident Commission provides CTP through a levy in the vehicle registration fee, known as the TAC charge. A similar scheme exists in Tasmania through the Motor Accidents Insurance Board. A similar scheme applies in Western Australia, through the Insurance Commission of Western Australia. The Northern Territory scheme is managed through Territory Insurance Office.
Bangladesh
For all types of motor insurance policies in Bangladesh, the limit of liability has been fixed by the law. Currently, the limits are too low to compensate the victims. In respect of Act Only Liability Motor Vehicle Insurance, the compensation for personal injuries and property damage to third parties is BDT 20,000 for death, for severe injury, for injury, and for property damage. The limits are under review by the governmental bodies.Canada
Several Canadian provinces provide a public auto insurance system while in the rest of the country insurance is provided privately. The third-party insurance is privatized in Quebec and is mandatory. The province covers everything but the vehicle. 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 crash 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 three-month period for which they are allowed to use their international licence. International laws provide visitors to the country with an International Insurance Bond until this three-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 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.Facility insurance policies are offered by the "facility association residual market", as a last resort since auto insurance is mandatory in Canada, for private and commercial high-risk drivers who cannot buy a policy in the voluntary market.
China
Traffic Compulsory Insurance provides protection in the event of third party injuries, third party property losses, etc. The minimum liability cover is RMB180,000 for death and injury/per crash, RMB18,000 for medical expense, and RMB2,000 for physical loss. Additional 3rd Party Liability Insurance also known as Commercial Motor Insurance provides extra cover up to RMB10,000,000 excluding the driver and passengers. Driver and Passenger insurance covers the driver and passengers, whilst Vehicle Damage and Theft Insurance covers vehicle damage and the objects contained inside. Excess Waiver Insurance is an additional option that waives any deductibles.Some differences apply in different regions:
Hong Kong
According to section 4 of the Motor Vehicles Insurance Ordinance, all users of a car, include its permitted users, must have insurance or some other security with respect to third-party risks. Third party insurance protects the policyholder against liability of death or bodily injury to third party up to and/or damage to third party property up to as a result of crash arising out of the use of the insured vehicle. Comprehensive Motor Insurance is also available.Macau
The mandatory minimum legal requirement Third Party Liability Cover is MOP1,500,000 per crash and MOP30,000,000 per year, protecting against the legal liability arising from a traffic crash causing loss and damages to any third party. Comprehensive Motor Insurance is also available.European Union
In the European Union, from the introduction of Directive 1972/166/EEC, insurance cover is mandatory, with the statutory minimum cover being revised every five years, the most recent revision, via Directive 2021/2118 requires:- in the case of personal injury, a minimum amount of cover of €1,300,000 per injured party or €6,450,000 per claim, irrespective of the number of parties;
- in the case of damage to property, €1,300,000 per accident.
Finland
The Finnish road traffic insurance was made mandatory in 1925, when the first Act of Parliament on the topic was promulgated. At the time, the madatoryninsurance covered only partially the damages of the non-guilty party: all property damage was covered, but only permanent personal injury and death were covered by insurance. In 1938, all personal injuries of third parties came under the mandatory insurance scheme. The passengers of the guilty driver were covered in 1951, and the guilty driver's personal injuries were covered in 1968. In 1980, the liability regime was based on strict liability: the insurance of a vehicle covers all accidents related to its operation, regardless of the owner's culpability.The Finnish Traffic Insurance Act mandates a traffic insurance for all vehicles with a structural speed over 15 km/h or vehicles that are registered for road traffic, with the exception of electrical travel assists with a speed below 25 km/h and mass below 25 kg and for electrical bicycles that turn off their motor at 25 km/h. All commercially rented electric scooters need an insurance, though.
The liability limit of the mandatory insurance is 5 million euros for property damage. For personal injuries, there is no liability cap. The insurance covers all personal injuries, including those of the at-fault driver. The property damage is compensated fully to non-vehicular parties without prejudice to culpability. Vehicle damage is compensated only if the insured vehicle involved was operated against traffic rules or loaded or maintained incorrectly. The damages to the insured vehicle or its trailer are not compensated.
A person who has neglected to take a vehicle insurance is legally liable for a compensation payment not more than three times the insurance premium avoided.
The Finnish Motor Insurers' Center is responsible for paying the compensations to victims of accidents where the responsible vehicle is unknown, foreign or uninsured. It also pays the compensation to individual insurance companies for major accidents where the liability exceeds 75 million euros and pays out insurance claims in case a vehicle insurance company has gone bankrupt. The Center is financed by obligatory contributions of all companies that give vehicle insurance to Finnish vehicles.
The law requires that in a civil lawsuits against a person who has operated a vehicle, any compensation for damages caused by the operation of the vehicle shall be adjusted to be paid directly by the insurance company, never by the person involved in the accident.