Vehicle insurance

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Uninsured cars seized by police in Liverpool

Vehicle insurance is a type of insurance specifically designed to cover risks associated with vehicles, including cars, motorcycles, and other road vehicles. This insurance provides 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 keying, 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.

Types of Coverage

Vehicle insurance can cover some or all of the following items:

• Liability insurance: This coverage pays for the policyholder's legal responsibility to others for bodily injury or property damage.
• Collision: Collision coverage pays for damage to the policyholder's car from a collision.
• Comprehensive: This coverage reimburses for loss from theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, flood, riot, and civil commotion.
• Uninsured motorist coverage: This coverage pays for a policyholder's injuries and, in some jurisdictions, property damage caused by an uninsured or a hit-and-run driver. In the case of underinsured drivers, this coverage can also pay for the difference between the damages and what the uninsured driver can pay.

Regulation

The regulation of vehicle insurance varies significantly between different countries and within countries. In some regions, it is compulsory to have vehicle insurance before using or keeping a vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver; however, the degree of each varies greatly.

History

Vehicle insurance has a long history, evolving alongside the development of the automobile. Initially, there were few regulations for motor vehicles, and as cars became more common, the need for vehicle insurance grew. The UK introduced the first mandatory vehicle insurance law in 1930. Since then, most countries have enacted similar laws requiring drivers to have insurance before they can legally drive.

Premiums

Insurance premiums vary depending on several factors, including the make and model of the vehicle, the age and experience of the driver, and the driver's record of previous claims. Insurers use actuarial science to determine the cost of insurance premiums. The premium can also vary depending on the insurance company's claims experience with policyholders in a particular location.

Claims

A claim is a formal request to an insurance company asking for a payment based on the terms of the insurance policy. The insurance company validates the claim and, once approved, issues payment to the insured or an approved interested party on behalf of the insured.

See Also

• Road traffic safety
• Motor vehicle theft
• Insurance fraud