Vehicle Insurance
Automobile is one of the most important inventions of the nineteenth century. The automobile industry revolutionized the American society at large; it proved to be a dangerous instrument inflicting death and personal injury to a lot of people.
A need was felt to protect motorists from the potentially enormous financial loss from operating a car. The policy makers understood that that automobile involved a lot of expenditure. Thus the policy makers made vehicle insurance mandatory so as to protect innocent third parties as well as the at-fault motorist from any sorts of liability.
In USA, though vehicle insurance obligations vary from state to state, but it is mandatory in all of them.
While looking at the Vehicle Insurance one can see that it is a complex interplay of financial responsibility laws, compulsory insurance laws, and uninsured motorist coverage which are largely based on the principles of Tort Law. Tort law under which vehicle insurance falls involves civil law and personal injury laws.
Legally speaking, tort occurs when someone either deliberately or through negligence harms another person or group. The concept of torts can easily be traced back to ancient mariners, to as back as 3000 B.C when merchants deliberately spread their cargo among several ships to reduce the potential loss due to either sinking or piracy.
Auto insurance was evolved from the interest shown by marines in protecting against financial loss. The tort notion of fault is so deeply embedded in previous theories of insurance that auto insurance naturally also came to rest on a fault system. This means whenever there was an auto accident, determination of fault and the liability would be done by it. But at times it was seen that the drivers are not able to pay for the damage done by them. For this purpose, it was made mandatory.
Over the years Vehicle Insurance has witnessed a tremendous rise. This is more because US as an economy has expanded a lot and the rapid growth of its supporting physical and legal infrastructure from road improvement to driver licensing.
It was mainly offered to ease the socio-economic losses associated with transportation, but as the preferred mode of transportation changed to automobile and the number of motor vehicle related fatalities was high, the states began to require that drivers cover the liability they incurred while operating their cars. Today it has become one of the most heavily regulated businesses in U.S. history.
The penalties for not acquiring insurance are quite severe. The law requires that a motorist to have at least third-party insurance to protect others against financial loss caused by the motorist’s vehicle, while coverage against damage to the motorist’s own vehicle or person is usually optional. By doing so the American insurance laws created an auto accident compensation system based on personal responsibility.
Currently, auto insurance is the only example of something that Americans are required by law to buy, but at the same time it is provided exclusively by private industry on a for-profit basis.
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