Widespread use of the motor car began after the First World War in urban areas. Cars were relatively fast and dangerous, yet there was no compulsory form of car insurance anywhere in the world. This meant injured victims rarely received 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 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 this 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 (then EEC) required mandatory insurance cover to be mandated by all member states from 1973.
In most jurisdictions, vehicle insurance is compulsory before using or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver, though the degree of each varies greatly. Several jurisdictions have experimented with a "pay-as-you-drive" insurance plan, utilizing either a tracking device in the vehicle or vehicle diagnostics.
Vehicle insurance can cover several items, including the insured party (medical payments), property damage caused by the insured, the insured vehicle (physical damage), and third parties (car and people, property damage and bodily injury). Coverage for injuries to persons riding in the insured vehicle is available without regard to fault in the auto crash in some jurisdictions (No Fault Auto Insurance). Other coverage options include the cost to rent a vehicle if yours is damaged, the cost to tow your vehicle to a repair facility, and crashes involving uninsured motorists. Different policies specify the circumstances under which each item is covered.
In Australia, every state has its own Compulsory Third-Party (CTP) 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.
Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company, in accordance with a framework of regulations set by the government. Often, the insurer will have more freedom to set the price on physical damage coverages than on mandatory liability coverages. When the premium is not mandated by the government, it is usually derived from the calculations of an actuary, based on statistical data. The premium can vary depending on many factors that are believed to affect the expected cost of future claims. These factors can include car characteristics, coverage selected (deductible, limit, covered perils), driver profile (age, gender, driving history), and car usage (commute to work or not, predicted annual distance driven).
This article is based solely on the supplied corpus. No external sources were consulted; claims that could not be substantiated against the corpus were omitted under the drop-the-claim rule.
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