Car Insurance
In the United States, vehicle insurance (also known as car insurance or automobile insurance) is designed to cover the financial liability or risk of damage to a motor vehicle that the owner may face if their vehicle is involved in a collision that results in property damage or bodily injury? Most states require that every motor vehicle owner carry at least some form of liability insurance. States that do not require vehicle owners to carry auto insurance include New Hampshire and Mississippi, which allow vehicle owners to post a cash bond (see below). The Privileges and Immunities Clause of Article IV of the United States Constitution protects the rights of citizens of each respective state when traveling to another state. The owner of a motor vehicle typically pays a monthly or annual fee to the insurance company, often called an insurance premium. The insurance premium paid by a motor vehicle owner is typically determined by a number of factors, including the type of vehicle, marital status, credit rating, whether the driver rents or owns the home, the age and gender of the covered driver, their driving style and history, and the location of the vehicle, which is primarily organized and protected. Most insurance companies will increase your insurance premium based on these factors and will offer discounts less frequently.
Insurance companies provide the motor vehicle owner with an insurance card for the applicable coverage period, which must be kept in the vehicle in the event of a traffic accident as proof of insurance. Recently, states have begun passing laws that allow authorities to accept electronic versions of proof of insurance.
Insurance Providers
In the United States in 2017, the largest providers of private passenger vehicle insurance by market share were State Farm (18.1%), GEICO (12.8%), Progressive Corporation (9.8%), Allstate (9.3%), and USAA (5.7%). Insurance is obtained by working with an independent insurance agent or insurance broker licensed to sell insurance policies. Some may represent the growing number of multiple agencies or online brokers that offer policy purchasing through online sites.
Integrated Single Limit
A combined single limit combines property damage liability coverage and bodily injury coverage under one common limit. For example, a driver insured with a combined liability limit crashes into another vehicle, injuring the driver and passengers. The same coverage will pay for damage to the other driver’s vehicle, as well as for injuries to the driver and passengers.
A Brief History of Car Insurance
With the invention of the automobile in the late 19th century, came the inevitable side effect of automobile collisions. As the frequency of automobile collisions increased, it became clear that, unlike other torts based on personal liability, automobile torts were susceptible to tort law because “[t]here is no way of knowing whether fault was foreseeable, and whether the victim of an automobile collision can collect from the tortfeasor.”
This led to the creation of the first financial liability and compulsory insurance laws in Massachusetts and Connecticut. The Connecticut Financial Liability Act of 1925 required the owner of a vehicle involved in a collision to prove financial liability for damages in excess of $100 to satisfy a claim for damages resulting from personal injury or death to any person, even if the amount was $10,000. 22] This initial financial liability requirement required vehicle owners to demonstrate financial liability after their first collision. Massachusetts introduced a law to address the collision problem, but it was a compulsory insurance law, not a financial responsibility law. It required automobile liability insurance as a condition of vehicle registration.
Massachusetts was the only U.S. state to have compulsory insurance until 1956, when the New York legislature passed its own compulsory insurance law. North Carolina followed suit in 1957, and many states enacted similar compulsory insurance laws in the 1960s and 1970s. Since the advent of the automobile insurance plan in 1925, nearly every state has adopted a compulsory insurance plan.