The Lowdown On Auto Insurance Laws
In most countries, having auto insurance coverage is not compulsory in order for you to register your car. In the Unites States, each state has their own particular auto insurance laws. Auto insurance is not compulsory in all states but even states that do not require insurance upon registration do have financial responsibility laws that require owners of motor vehicles to show proof of financial capacity to pay for damages and injuries in case of an auto accident. Aside from this states that do require auto insurance upon registration have varying laws on the minimum amount and type of coverage.
Insurance companies offer different types of auto insurance coverage based on the specific coverage package chosen by the vehicle owner. For most countries around the world, the minimum insurance requirement is the general liability or third party liability type of coverage. This type of insurance covers damage or injury to third party individuals, passengers or people outside vehicles. This is the minimum required by some countries because at the very least it compensates for damage or injury to people who are not at all involved in the accident but as a result are affected by it.
In many developed countries as well as in many states in the US, collision and medical payment insurance are also required. Collision gives policy holders coverage on vehicle damage due to auto accidents while medical payment gives the policy holder, passengers and bystanders injured during the auto accident medical coverage sometimes even including lost wages and other expenses that where incurred due to the occurrence of the accident.
States that enforce financial responsibility laws usually do not require the presentation of proof of financial capacity upon registration but only when an accident occurs. Failure to show proof of financial capability could mean the revocation of the driver’s license plus other penalties. In these states, the best way to show proof of capacity to shoulder financial cost is still by having auto insurance coverage. Aside from auto insurance laws regarding protection of property damage and personal injury, there are also laws protecting the rights of insurance holders and insurers. Insurers normally make insurance policies air tight, ensuring that they are well protected from any breach on the part of the insurance holder. Generally speaking, insurers are allowed to revoke the policy in the event the policy holder fails to pay the premium, the policy holder loses his/her driver’s license due to a violation of the law, gives the insurer false or incomplete information during the screening and application process prior to the approval of the insurance policy, or if the policy holder fails to report any change in the implementation of the policy, such as modifications to the vehicle insured, that may occur during the effective period of the policy. The insurance or policyholder is also protected by means of the implied obligation of all insurers to deal with them in “good faith and fair dealing”. This simply means that it is the insurers obligation to make sure to thoroughly investigate all claims and base their assessment and decision regarding the denial or approval based on these investigation and not merely to find reasons not to pay. If an insurer refuses to pay for a claim or offers a lower settlement than what is due, and with out proper investigation, it could lead to a “bad faith” claim against the insurer.
Motor Vehicle Accident
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