Car Insurance

Auto Insurance

Auto insurance (car insurance, motor 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.

Auto 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.

Insurance 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 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 while their vehicle was being used on a public road. Germany enacted similar legislation in 1939 called the "Act on the Implementation of Compulsory Insurance for Motor Vehicle Owners.

Coverage levels

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

• The insured party (medical payments)
• Property damage caused by the insured
• The insured vehicle (physical damage)
• Third parties (car and people, property damage and bodily injury)
• Third party, fire and theft
• In some jurisdictions coverage for injuries to persons riding in the insured vehicle is available without regard to fault in the auto crash (No Fault Auto Insurance)
• The cost to rent a vehicle if yours is damaged.
• The cost to tow your vehicle to a repair facility.
• Crashes involving uninsured motorists.

Different policies specify the circumstances under which each item is covered. For example, a vehicle can be insured against theft, fire damage, or crash damage independently.

If a vehicle is declared a total loss and the vehicle's market value is less than the amount that is still owed to the bank that is financing the vehicle, GAP insurance may cover the difference. Not all auto insurance policies include GAP insurance. GAP insurance is often offered by the finance company at time the vehicle is purchased.

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