Vehicle insurance
Vehicle insurance

Table of Contents

Vehicle Insurance

Vehicle insurance, known as car insurance, motor insurance, or auto insurance, provides coverage for a wide range of road vehicles, including cars, trucks, motorcycles, and others. Its primary purpose is to offer financial protection in the event of physical damage or bodily injury resulting from traffic accidents and potential liability arising from incidents involving a vehicle. Additionally, vehicle insurance can offer financial safeguards against theft of the insured vehicle and damage resulting from events other than traffic collisions. These non-collision events may include vandalism, damage caused by weather conditions or natural disasters, as well as collisions with stationary objects. The specific terms and conditions of vehicle insurance policies are subject to legal regulations that vary from one region to another.

The widespread use of motor cars gained momentum after the conclusion of the First World War, particularly in urban areas. Despite the increasing speed and associated risks of these vehicles, there was still no mandatory requirement for car insurance anywhere in the world at that time. Consequently, accident victims often struggled to receive compensation, while drivers faced significant costs for repairing their vehicles and property damage as a result of accidents.


The widespread adoption of motor cars in urban areas gained momentum following the First World War. These vehicles had become relatively faster and more powerful, yet, remarkably, there was still no mandatory requirement for car insurance anywhere in the world at this stage. Consequently, individuals injured in accidents would seldom receive compensation, and vehicle owners often had to bear substantial costs for repairing their damaged cars and property.

The introduction of compulsory car insurance marked a significant turning point, first implemented in the United Kingdom through the Road Traffic Act of 1930. This groundbreaking legislation mandated that all vehicle owners and drivers must carry insurance coverage for their liability in cases of injury or death to third parties when their vehicle was in use on public roads. A similar initiative was undertaken by Germany in 1939, known as the “Act on the Implementation of Compulsory Insurance for Motor Vehicle Owners.” These pioneering efforts aimed to ensure greater protection for both accident victims and vehicle owners by making insurance coverage mandatory.

Public Policies

In numerous jurisdictions, possessing vehicle insurance is a mandatory requirement for operating or parking a motor vehicle on public roads. The regulations regarding insurance typically encompass both the vehicle itself and the driver, although the extent of coverage varies significantly.

Some regions have explored the implementation of a “pay-as-you-drive” insurance scheme, employing either an in-vehicle tracking device or vehicle diagnostics. This approach aims to tackle the problem of uninsured motorists by offering alternative options while also determining premiums based on the distance driven. In theory, this system could enhance insurance efficiency by optimizing the collection process.


In Australia, each state operates its own Compulsory Third-Party (CTP) insurance system. CTP insurance specifically addresses personal injury liability in the event of a vehicle accident. Comprehensive insurance and Third-Party Property Damage insurance, with or without Fire and Theft coverage, are available as separate policies.

  • Comprehensive insurance provides coverage for damages to third-party vehicles, other third-party property, and the insured vehicle itself.
  • Third-Party Property Damage insurance is designed to cover damage to third-party property and vehicles, excluding any damage to the insured vehicle.
  • Third-Party Property Damage with Fire and Theft insurance not only includes coverage for damage to third-party property and vehicles but also provides protection for the insured vehicle against fire and theft.

Compulsory Third-Party Insurance

Compulsory Third-Party (CTP) insurance is mandatory in all Australian states and is included as part of the vehicle registration process. It offers protection to the vehicle owner and anyone driving the vehicle against liability claims for injuries or fatalities resulting from the vehicle owner’s or driver’s fault. CTP coverage encompasses various forms of physical harm, bodily injuries, and may cover expenses related to reasonable medical treatment, loss of income, the cost of care services, and, in certain instances, compensation for pain and suffering. Each Australian state operates its distinct CTP insurance scheme.

It’s important not to confuse Third-Party Property insurance or Comprehensive insurance with Compulsory Third-Party insurance. Third-Party Property insurance or Comprehensive insurance covers expenses related to vehicle repairs, property damage, or medical costs for third parties resulting from an accident caused by the insured driver.

In New South Wales, vehicle insurance is a prerequisite for vehicle registration, commonly referred to as a ‘greenslip’ due to its color. There are five licensed CTP insurers in New South Wales, including Suncorp (which holds licenses for GIO and AAMI) and Allianz. QBE and NRMA Insurance (NRMA) hold the remaining two licenses. APIA, Shannons, and InsureMyRide also provide CTP insurance licensed by GIO.

In the Australian Capital Territory, a privately provided scheme is in place through AAMI, APIA, GIO, and NRMA. CTP is part of the vehicle registration payment.

In Queensland, CTP is integrated into the vehicle registration fee, with a choice of private insurers such as Allianz, QBE, RACQ, and Suncorp. Prices are regulated by the government.

Since July 2016 in South Australia, CTP is no longer provided by the Motor Accident Commission. The government has licensed four private insurers – AAMI, Allianz, QBE, and SGIC – to offer CTP insurance in South Australia. Vehicle owners can select their CTP insurer since July 2019, and new insurers may enter the market.

Three states and one territory in Australia do not have a private CTP scheme. In Victoria, the Transport Accident Commission offers CTP through a levy in the vehicle registration fee, known as the TAC charge. Tasmania operates a similar scheme through the Motor Accidents Insurance Board. Western Australia has a comparable system through the Insurance Commission of Western Australia (ICWA). The Northern Territory’s CTP scheme is managed by the Territory Insurance Office (TIO).


In Bangladesh, the legal framework establishes specific liability limits for all categories of motor insurance policies. Presently, these limits are insufficient to adequately compensate the victims. Under the Act Only Liability Motor Vehicle Insurance, compensation for third parties’ personal injuries and property damage is fixed at BDT 20,000 for fatalities, BDT 10,000 for serious injuries, BDT 5,000 for injuries, and BDT 50,000 for property damage. These limits are currently undergoing evaluation and review by relevant government authorities.


Several Canadian provinces, including British Columbia, Saskatchewan, Manitoba, and Quebec, operate public auto insurance systems, while the rest of the country relies on private insurance providers. In Quebec, third-party insurance is privatized and compulsory, covering all aspects except the vehicle(s) themselves. Basic auto insurance is mandatory nationwide in Canada, with specific provinces determining the minimum required coverage and optional benefits. Accident benefits coverage is obligatory in all provinces except Newfoundland and Labrador. Every Canadian province offers some form of no-fault insurance for accident victims, though the degree to which tort or no-fault is emphasized varies.

International drivers visiting Canada can operate any vehicle their license permits for up to three months, during which they are covered by an International Insurance Bond (IIB). After this period, international drivers must obtain Canadian insurance. The IIB is reinstated each time an international driver enters the country.

Damage coverage for the driver’s own vehicle is typically optional, except in Saskatchewan, where SGI includes collision coverage with a deductible of less than $1,000 as part of its basic insurance policy. Although residents in Saskatchewan have the option of auto insurance through a tort system, fewer than 0.5% of the population choose this alternative.

For high-risk drivers who cannot secure a policy in the regular auto insurance market due to the mandatory nature of auto insurance in Canada, facility insurance policies are provided through the “facility association residual market” (or “FARM”) as a last resort.


Traffic Compulsory Insurance offers protection for third-party injuries, third-party property losses, and more. The minimum liability coverage includes RMB180,000 for death and injury per crash, RMB18,000 for medical expenses, and RMB2,000 for physical loss. Additionally, there is 3rd Party Liability Insurance, also known as Commercial Motor Insurance, which provides additional coverage up to RMB10,000,000, excluding the driver and passengers.

Driver and Passenger insurance specifically covers the driver and passengers, while Vehicle Damage and Theft Insurance provide coverage for vehicle damage and the contents within the vehicle. An optional Excess Waiver Insurance is available, which waives any deductibles.

It’s important to note that there may be regional differences in the specifics of these insurance policies.

Hong Kong

As per section 4(1) of the Motor Vehicles Insurance (Third-Party Risks) Ordinance (Cap. 272 of the Laws of Hong Kong), it is mandatory for all car users, including those permitted to use the vehicle, to possess insurance or some other form of security to cover third-party risks. This third-party insurance provides coverage to the policyholder for liabilities related to death or bodily injury to a third party, up to HK$100,000,000, and/or damage to third-party property, up to HK$2,000,000, resulting from an accident involving the insured vehicle. Additionally, Comprehensive Motor Insurance is also available for those seeking more extensive coverage.


The obligatory minimum legal requirement for Third Party Liability (“TPL”) Cover is set at MOP1,500,000 per crash and MOP30,000,000 annually. This coverage safeguards against the legal liability resulting from a traffic crash that causes loss and damages to any third party. Additionally, Comprehensive Motor Insurance is offered as an option for more extensive coverage.

European Union

Within the European Union, insurance is mandatory and must meet certain minimum requirements:

  • For personal injury, a minimum coverage amount of €1,000,000 per victim or €5,000,000 per claim, regardless of the number of victims.
  • For property damage, a minimum coverage amount of €1,000,000 per claim, regardless of the number of victims.
  • In some European languages, comprehensive insurance is referred to as “casco.”


Since 1939, it has been mandatory to have third-party personal insurance when owning a motor vehicle in all federal states of Germany. Additionally, vehicle owners have the option to purchase comprehensive insurance coverage. Various private insurers offer all types of car insurance in Germany. The insurance premium is determined by several factors, including the region, car type, and individual driving habits.

As per German law, the minimum coverage for car liability insurance or third-party personal insurance is €7,500,000 for bodily injury (injury to individuals), €500,000 for property damage, and €50,000 for financial losses that are not directly or indirectly related to bodily injury or property damage. Insurance companies typically provide all-inclusive or combined single limit insurance policies with coverage of €50,000,000 or €100,000,000 (approximately €141,000,000) for bodily injury, property damage, and other financial losses. There is usually a bodily injury coverage limit of €8–15,000,000 for each injured person.


In Hungary, third-party vehicle insurance is obligatory for all vehicles, and it cannot be exempted through a monetary deposit. The insurance premium provides coverage for all damages up to HUF 500 million (approximately €1.8 million) per accident without any deductible. In cases involving personal injuries, the coverage is extended to HUF 1,250 million (around €4.5 million). Vehicle insurance policies issued in all European Union (EU) countries, as well as some non-EU countries, are recognized and valid in Hungary due to bilateral or multilateral agreements. However, visitors with vehicle insurance that is not covered by such agreements are required to purchase a monthly, renewable policy at the border.


In Indonesia, third-party vehicle insurance is a mandatory requirement, and every individual car and motorcycle must be insured to be considered legally operational. This compulsory auto insurance is legally known as the Road Traffic Accidents Compulsory Coverage Fund (Indonesian: Dana Pertanggungan Wajib Kecelakaan Lalu Lintas Jalan, DPWKLLJ). Consequently, a motorist cannot operate the vehicle until it is properly insured. DPWKLLJ, which covers only bodily injuries, was introduced in 1964 and is managed by a state-owned enterprise called PT Jasa Raharja (Persero).

The DPWKLLJ coverage is included in the annual vehicle tax, which is paid to the local Samsat (Sistem Administrasi Manunggal di bawah Satu Atap), responsible for managing cars and roads. This contribution is referred to as the Compulsory Donation to the Road Traffic Accident Fund (Indonesian: Sumbangan Wajib Dana Kecelakaan Lalu Lintas Jalan, SWDKLLJ).


Auto insurance in India provides coverage for the loss of or damage to the automobile or its components due to both natural and man-made calamities. It offers accident coverage for vehicle owners while driving, as well as for passengers and third-party legal liability. Some general insurance companies also offer online insurance services for vehicles.

Auto insurance is a mandatory requirement for all new vehicles, whether they are used for commercial or personal purposes. Insurance companies have partnerships with leading automobile manufacturers and offer customers instant auto quotes. Premiums are determined by various factors, including the vehicle’s make and value, the state of registration, and the year of manufacture. Premium amounts can be reduced by requesting a no-claim bonus (NCB) if no claims were made in the previous year. To file an auto insurance claim in India, certain documents are required, such as a duly signed claim form, the vehicle’s RC copy, a copy of the driver’s license, an FIR copy, the original estimate, and the policy copy.

There are different types of auto insurance in India:

1. Private car insurance: This is the fastest-growing sector in India, as it is mandatory for all new cars. Premium amounts depend on factors such as the car’s make and value, the state of registration, and the year of manufacture. Customers can reduce this amount by claiming a no-claim bonus (NCB) if no claims were made in the previous year.

2. Two-wheeler insurance: This covers accidental insurance for the driver of the vehicle. Premium amounts are calculated based on the current showroom price multiplied by the depreciation rate fixed by the Tariff Advisory Committee at the beginning of a policy period.

3. Commercial vehicle insurance: This provides coverage for vehicles not used for personal purposes, such as trucks and HMVs. Premium amounts depend on the vehicle’s showroom price at the commencement of the insurance period, the make of the vehicle, and the place of registration.

Auto insurance in India generally includes coverage for:

– Loss or damage due to collision, fire, lightning, self-ignition, external explosion, burglary, housebreaking, or theft, as well as malicious acts.
– Liability for third-party injury/death, third-party property damage, and liability to paid drivers.
– Loss/damage to electrical/electronic accessories (available with the payment of an additional premium).

Auto insurance in India generally does not cover:

– Consequential loss, depreciation, mechanical and electrical breakdown, failure, or breakage.
– Use of the vehicle outside the geographical area covered by the policy.
– War or nuclear perils and incidents of drunken driving.

Third party insurance

Under the Motor Vehicles Act of 1988, it is obligatory to have third-party insurance coverage. This type of coverage cannot be utilized for personal damages. It is available at affordable premiums and enables third-party claims under a “no-fault liability” system. The premium is determined based on the rates established by the Tariff Advisory Committee, a division of the IRDA (Insurance Regulatory and Development Authority of India). This coverage encompasses bodily injury or accidental death as well as property damage.


The Road Traffic Act of 1933 mandates that all operators of mechanically propelled vehicles in public areas must have a minimum of third-party insurance or obtain an exemption. This exemption typically involves depositing a substantial sum of money with the High Court as a guarantee against potential claims. In 1933, the specified deposit amount was £15,000. The Road Traffic Act of 1961, which is currently in effect, abolished the 1933 act but introduced nearly identical provisions.

Since 1968, individuals wishing to make such deposits must obtain consent from the Minister for Transport, who determines the required sum.

Those not eligible for exemptions must secure a certificate of insurance from their insurance provider and display a portion of it, known as an insurance disc, on their vehicle’s windshield (if applicable). The complete certificate must be provided to a police station within ten days if requested by a law enforcement officer. Proof of insurance or exemption is also necessary to pay the motor tax.

Individuals who sustain injuries or experience property damage/loss due to uninsured drivers can file claims with the Motor Insurance Bureau of Ireland’s fund for uninsured drivers. This fund also assists individuals injured in hit-and-run incidents, although it does not cover those who have suffered property damage or loss in such cases.


Law 990/1969 stipulates that every motor vehicle or trailer, whether stationary or in motion on a public road, must have third-party insurance, referred to as RCA (Responsabilità civile per gli autoveicoli). In the past, a portion of the insurance certificate needed to be displayed on the vehicle’s windshield. However, this requirement was abolished in 2015, following the creation of a national database of insured vehicles by the Insurance Company Association (ANIA, Associazione Nazionale Imprese Assicuratrici) and the National Transportation Authority (Motorizzazione Civile). This database allows private citizens and public authorities to verify whether a vehicle is insured. There are no exemptions to this legal provision.

Driving without the mandatory insurance for a vehicle is a punishable offense that can lead to prosecution by the police, with fines ranging from 841 to 3,287 euros. Police authorities also have the authority to impound a vehicle that lacks the required insurance until the vehicle owner pays the fine and obtains a new insurance policy. The same procedure is applied when a vehicle is parked on a public road without the necessary insurance.

Basic insurance policies typically provide coverage only for third parties, including the insured person and any third parties traveling in the vehicle, but not the driver unless the two are different individuals. Third-party, fire, and theft insurance is a common type of policy, while comprehensive policies (kasko policies) also cover damages to the insured vehicle resulting from an accident or injuries. These policies may also include a waiver clause in which the insurance company declines compensation for damages in certain cases, typically involving violations of the law by the driver, such as driving under the influence (DUI).

Victims of accidents caused by uninsured vehicles may receive compensation from the Road’s Victim Warranty Fund (Fondo garanzia vittime della strada), which is funded by a fixed percentage (2.5%, as of 2015) of each RCA insurance premium.


Third-party vehicle insurance is a compulsory requirement for all vehicles in the Netherlands, as specified in Article 2 of the Wet aansprakelijkheidsverzekering motorrijtuigen (Motor Vehicle Liability Insurance Act). Failure to insure a vehicle results in a fine issued by the RDW (Netherlands Vehicle Authority). The third-party vehicle insurance is known as a WA verzekering, with “WA” standing for Wettelijke aansprakelijkheid, which translates to legal liability. In the Netherlands, there are generally three types of auto insurance:

1. WA verzekering (liability insurance): This is the mandatory legal third-party coverage, which provides protection against claims from third parties for bodily injury or property damage caused by the insured vehicle.

2. WA beperkt casco (limited frame coverage): This type of insurance extends coverage to include certain additional risks not covered by the mandatory liability insurance. It typically covers damage caused by weather events like storms and flooding, as well as fire damage and theft of the vehicle.

3. WA volledig casco (full frame coverage): Full frame coverage offers the most extensive protection, encompassing all the risks mentioned above and also covering damage to the insured vehicle caused by the driver themselves.

Drivers in the Netherlands are required to have at least the mandatory liability insurance, but they can choose to opt for additional coverage, such as limited frame or full frame coverage, to further protect their vehicle and themselves against a wider range of risks.

New Zealand

In New Zealand, the Accident Compensation Corporation (ACC) offers a comprehensive nationwide no-fault personal injury insurance program. Injuries related to motor vehicles traveling on public roads are specifically covered by the Motor Vehicle Account. Funding for this account is primarily generated through levies on petrol and vehicle licensing fees.


In Norway, it is a legal requirement for vehicle owners to have at least minimum liability insurance for their vehicles, regardless of the vehicle type. Using a vehicle without this insurance is considered illegal. If an individual drives a vehicle owned by someone else and is involved in an accident, the insurance will provide coverage for the damages incurred. It’s worth noting that the insurance policy provider may have the option to restrict coverage to family members or individuals above a certain age.


Romanian law requires all vehicle owners to have Răspundere Auto Civilă, which is motor-vehicle liability insurance, in order to provide coverage for damages to third parties.

Russian Federation

In Russian legislation, motor vehicle liability insurance is compulsory for all vehicle owners. While insurance of the vehicle itself is technically voluntary, it may be required in certain situations, such as when the car is leased.

South Africa

South Africa dedicates a portion of the funds generated from fuel sales to the Road Accident Fund, which is used to provide compensation to third parties involved in accidents.


In order to operate on public roads, every motor vehicle is required to have third-party insurance, known as “Seguro de responsabilidad civil.”

Law enforcement authorities have the authority to impound vehicles lacking the requisite insurance until the vehicle owner pays the fine and obtains a new insurance policy. Driving without the mandated insurance is a punishable offense, subject to police prosecution and penalties. The same rules apply when a vehicle is parked on a public road.

The minimum insurance policy provides coverage solely for third parties, including the insured person and third parties transported by the vehicle, but not the driver unless they do not coincide. “Third parties, fire, and theft” is a prevalent insurance policy.

Victims of accidents caused by uninsured vehicles may be eligible for compensation from a Warranty Fund, which is funded by a fixed amount for each insurance premium.

Since 2013, it has been possible to purchase insurance for specific days, similar to practices in countries like Germany and the UK.

United Arab Emirates

When purchasing car insurance in the United Arab Emirates, the traffic department mandates a 13-month insurance certificate for vehicle registration or renewal. In Dubai, adherence to UAE RTA law makes vehicle insurance a compulsory requirement. Two primary types of motor insurance policies exist in Dubai: Third-Party Liability Insurance and Comprehensive Motor Insurance.

For every individual vehicle owner in Dubai, having third-party liability insurance is obligatory. This insurance policy represents the most fundamental form of vehicle insurance in Dubai, offering coverage for third-party property damage or bodily injuries caused by the insured vehicle.

However, it’s important to note that the policy does not cover damage to the policyholder’s own vehicle, including incidents such as fire, theft, and accidental collisions.

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 law is contained in the Road Traffic Act 1988 (generally referred to as the RTA 1988 as amended). Section 143 of that Act requires that motorists be insured 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.

Compulsory Insurance and Offences

Formerly, an alternative to compulsory insurance existed, whereby an individual could make a specified deposit (£500,000 in 1991) and keep the sum deposited with the Accountant General of the Supreme Court. However, this option was abolished in 2019.

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.

Enforcement and Penalties

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.

Electronic Insurance Database and Certificates

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. 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.

Changes in Vehicle Insurance

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.

Continuous Insurance Enforcement

Vehicles kept in the UK must now be continuously insured unless a Statutory Off Road Notification (SORN) has been formally submitted. 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 that is not declared SORN, must have a valid insurance policy in force whether or not it is kept on public roads and whether or not it is driven.

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. 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. From 1 October 2014, it is no longer a legal requirement to display a vehicle excise licence (tax disc) on a vehicle. 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.

Other Considerations and Motor Insurers’ Bureau (MIB)

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 the 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 October 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.

The Motor Insurers’ Bureau (MIB) compensates the victims of road crashes 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.

Gender Neutrality in Premium Calculation

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 crash, 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 loophole, 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 came into action from December 2012.

Investigation of repair costs and fraudulent claims

In September 2012, the Competition Commission initiated an investigation into the credit repair and credit hire system in the UK, particularly concerning claims arising from third-party accidents. In cases where a client is deemed not at fault, Accident Management Companies would take charge of their claim, managing all aspects, often on a ‘No Win – No Fee’ basis. During this process, it became evident that the insurers of the at-fault party had limited control over the costs associated with the claim, including repair expenses, storage fees, vehicle hire charges, referral fees, and personal injury claims.

The escalating costs of certain claim components raised concerns in recent years, leading to an increase in premium expenses. This goes against the collective responsibility of all parties involved to minimize claim costs. Additionally, there has been a surge in the phenomenon known as “Cash for Crash,” where two parties orchestrate a collision between their vehicles. One driver then submits exaggerated claims for damages and fictitious injuries, including passengers they have arranged to be present during the collision.

Another concerning development involves deliberate collisions caused by a driver abruptly slamming on their brakes. This tactic is often employed at roundabouts when the following driver’s attention is diverted to oncoming traffic, causing them to rear-end the vehicle in front, seemingly for no apparent reason.

It’s important to note that staging motor collisions on public highways for the purpose of committing insurance fraud is considered organized crime by the courts. Convictions in such cases are treated accordingly.

United States

Vehicle insurance regulations in the United States vary from state to state, including other territories, and each state has its own set of mandatory minimum coverage guidelines (for more details, refer to the separate main article). Generally, 48 states in the U.S. along with the District of Columbia mandate that drivers must carry insurance covering both bodily injury and property damage. There are exceptions in New Hampshire and Virginia, although the specific minimum coverage amounts required by law can differ significantly from one state to another.

For instance, the minimum requirements for bodily injury liability coverage can range from $30,000 in Arizona to $100,000 in Alaska and Maine. Similarly, the minimum requirements for property damage liability coverage can vary from $5,000 to $25,000 in most states.

Read More : Vehicle Insurance In The United States


Renewing car insurance is a common practice in Malaysia, where there are generally four types of car insurance available:

1. Act Cover:
This offers the minimum coverage required by the Road Transport Act 1987. It primarily deals with legal liability for third-party death or physical injury, excluding passengers. It is rarely offered by insurers due to its limited scope.

2. Third-Party Coverage:
Mandatory for all vehicles, this is the most basic and widely held car insurance in Malaysia. It provides coverage against claims for injuries or damage to third parties or their property resulting from an accident.

3. Third-Party, Fire, and Theft Coverage:
In addition to third-party coverage, this policy extends to include coverage for your own vehicle in case of fire, accident, or theft.

4. Comprehensive Coverage:
Offering the broadest protection, comprehensive coverage includes third-party physical injury and death, third-party vehicle damage, and damage to your own vehicle caused by fire, theft, or accidents. This type of insurance is typically tailored for luxury vehicles.

Level Of Coverage

Vehicle insurance can encompass various aspects of coverage, including:

1. Medical Payments for the Insured Party:
Covers medical expenses for the insured party resulting from an accident.

2. Property Damage Caused by the Insured:
Provides coverage for damage caused by the insured party to others’ property.

3. Physical Damage to the Insured Vehicle:
Protects the insured vehicle against physical damage, such as collisions or fire.

4. Third-Party Coverage:
Includes coverage for damage to third-party vehicles, property, or bodily injuries caused by the insured party.

5. Third-Party, Fire, and Theft:
Extends coverage to include fire damage or theft of the insured vehicle in addition to third-party liability.

6. No-Fault Auto Insurance (In Some Jurisdictions):
Offers coverage for injuries to individuals riding in the insured vehicle, regardless of fault in the accident.

7. Rental Vehicle Coverage:
Covers the cost of renting a replacement vehicle if the insured vehicle is damaged.

8. Towing Expenses:
Pays for the cost of towing the insured vehicle to a repair facility.

9. Uninsured Motorist Coverage:
Provides protection in the event of accidents involving uninsured motorists.

The specifics of coverage can vary depending on the policy and jurisdiction. For example, policies may allow for independent coverage against theft, fire damage, or collision damage. Additionally, in cases where a vehicle is declared a total loss, and its market value is less than the amount owed to the financing bank, GAP insurance may cover the difference. It’s important to note that not all auto insurance policies include GAP insurance, and it is often offered separately by the finance company at the time of vehicle purchase.


An excess payment, commonly referred to as a deductible, is a fixed amount that must be paid for each instance of car repair covered by an automotive insurance policy. Typically, this payment is made directly to the auto repair facility (referred to as a “garage,” where vehicles are serviced and repaired) when the vehicle owner retrieves their car. In cases where a vehicle is declared a “write-off” or “totaled,” the insurance company will subtract the agreed-upon excess amount from the settlement payment provided to the owner.

If the accident is determined to be the fault of the other driver and their insurer acknowledges this responsibility, the vehicle owner may have the opportunity to recover the excess payment from the other driver’s insurance company.

Furthermore, the excess itself can be safeguarded through a motor excess insurance policy, ensuring that the vehicle owner is protected from having to pay the deductible in the event of a covered claim.

Compulsory Excess

A compulsory excess is the lowest excess payment that an insurer will require as part of the insurance policy. The specific amount of this minimum excess can differ based on individual factors such as personal information, driving history, and the insurance provider. For instance, young or inexperienced drivers, as well as certain types of incidents, may lead to additional compulsory excess charges.

Voluntary Excess

To lower the insurance premium, the policyholder can opt to pay a higher excess (deductible) compared to the compulsory excess required by the insurance company. The voluntary excess represents an additional amount, beyond the compulsory excess, that the policyholder agrees to pay when filing a claim under the policy. By accepting a higher excess, which decreases the financial risk for the insurer, the insurance company can provide a considerably reduced premium.

Basis of Premium Charges

The determination of insurance premiums can be influenced by government mandates or determined by insurance companies within a regulatory framework established by the government, depending on the jurisdiction. In many cases, insurers have more flexibility in setting rates for physical damage coverage compared to mandatory liability coverage.

In cases where the government does not mandate the premium, it is typically calculated by actuaries using statistical data. The premium may fluctuate based on various factors that are believed to impact the anticipated cost of future claims. These factors may encompass vehicle characteristics, chosen coverage (deductible, limits, covered risks), driver profile (age, gender, driving history), and vehicle usage (commuting, predicted annual mileage).

Read More : Basis of Premium Charges

Repair insurance

Auto repair insurance, available across all 50 states in the United States, serves as an extension of standard car insurance. It specifically covers the natural wear and tear experienced by a vehicle, regardless of damages resulting from a car accident.

Many drivers choose to invest in this insurance to safeguard themselves against the potentially high costs of breakdowns that are unrelated to accidents. Notably, auto repair insurance differs from more common coverage types such as comprehensive and collision insurance, as it does not provide protection for vehicle damage caused by collisions, natural disasters, or vandalism.

This insurance option becomes particularly appealing to individuals when their vehicle warranties have expired.

Providers of auto repair insurance may offer various sub-divisions of coverage. The standard repair insurance deals with typical vehicle wear and tear and naturally occurring breakdowns. On the other hand, some companies specialize in mechanical breakdown insurance, which specifically covers repairs required for breakable vehicle components that need fixing or replacement. These components may include transmissions, oil pumps, pistons, timing gears, flywheels, valves, axles, and joints.

In certain countries, insurance companies establish direct repair programs (DRPs) to facilitate their customers’ access to recommended car body repair shops. Some companies even offer one-stop shopping services, enabling customers to drop off their damaged vehicles, where an adjuster manages the claim, arranges for vehicle repairs, and often provides a replacement rental car. During the repair process, car body repair shops are typically instructed to adhere to specific guidelines regarding the selection of original equipment manufacturer (OEM) parts, original equipment supplier parts (OES), Matching Quality spare parts (MQ), and generic replacement parts. The utilization of both DRPs and non-OEM parts contributes to cost control and maintains competitive insurance rates. Karel Bukholczer, the General Secretary of the International Car Body Repair Association (AIRC), has emphasized the significant impact of DRPs on car body repair shops.

See More

Backlink Create

Stenorhynchus Seticornis (Arrow Crab) – Biography Points
Table of Contents Stenorhynchus seticornis (Arrow Crab ) Stenorhynchus seticornis, commonly known as the yellowline arrow crab or simply arrow crab, is a fascinating marine species renowned for its distinctive features. One striking characteristic is its elongated, spider-like legs, which are more than three times the length of its body, reminiscent of a daddy long-legs […]
German Spaniel – Biography Points
Table of Contents German Spaniel (Deutscher Wachtelhund) The German Spaniel, alternatively referred to as the Deutscher Wachtelhund or German Quail Dog, boasts a rich heritage dating back to 1890 Germany, where it emerged as a prized hunting companion. Originating from the esteemed lineage of the Stöberer, a favored breed among commoners post the 1848 German […]
Nicobar Pigeon – Biography Points
Table of Contents Nicobar Pigeon (Nicobar Dove) The Nicobar pigeon, scientifically known as Caloenas nicobarica, is an exquisite bird inhabiting small islands and coastal regions stretching from the Andaman and Nicobar Islands in India, across the Indonesian Archipelago, to the Solomons and Palau. Remarkably, it stands as the sole surviving member of the Caloenas genus, […]
Long-Nosed Snake – Biography Points
Table of Contents Long-Nosed Snake (Rhinocheilus lecontei ) The long-nosed snake (Rhinocheilus lecontei) is a captivating member of the Colubridae family, indigenous to North America, boasting two distinguished subspecies. Once considered part of a larger genus, it stands distinct with its slender body and elongated snout, distinguishing features that facilitate its unique hunting habits. Contrary […]
Longnose Hawkfish – Biography Points
Table of Contents Longnose Hawkfish (Oxycirrhites typus ) The longnose hawkfish, scientifically known as Oxycirrhites typus, represents a captivating species of marine life, classified within the hawkfish family Cirrhitidae. Inhabiting the vibrant tropical reefs of the Indian Ocean and the Pacific Ocean, this distinctive fish thrives at depths ranging from 10 to 100 meters (33 […]
Ancient History: 10 Secrets of Great Civilizations – Biography Points
Ancient History Table of Contents Ancient History Overview Note :  Pervious Article Go To Ancient history serves as the foundation upon which modern civilizations are built. By delving into the depths of ancient societies, we gain invaluable insights into the origins of human culture, politics, technology, and philosophy. Understanding the struggles, achievements, and innovations of […]
Ancient History – Fascinating Aspects – Biography Points
Ancient history Table of Contents Ancient History Note :  Update New Version Article : Click Here Ancient history spans from the start of recorded human experiences to the end of antiquity. It offers a captivating journey through about 5,000 years of human civilization. Its story unfolds as written language emerges. This is marked by the […]
Super commuter – Explanation – Biography Points
Super commuter Table of Contents Super Commuter A super commuter is someone employed in the central county or downtown core of a metropolitan area but resides outside that same area due to prohibitive living costs. These individuals undertake lengthy journeys, either daily or weekly, between their homes and workplaces, utilizing various modes of transportation such […]