Car insurance, which can also be referred to as auto insurance, vehicle insurance, or motor insurance is purchased for road vehicles, cars, trucks and motorcycles, to provide fiscal protection from damage to the vehicle as well as bodily injury of the drivers resulting from accidents. Terms and conditions- and their implementations- of compulsory car insurance varies between regions and governments, of course. There are advantages to compulsory car insurance, most importantly risk management, and only one real disadvantage, the forced cost.
Compulsory car insurance means that all owners and operators of vehicles must have third party insurance. This is meant to cover third party liabilities; that is property damage and bodily injury. This insurance includes protection from destruction or damage of the vehicle by fire, whether by accident or malicious intent/arson. Finally, this also includes protection against the theft of the vehicle. It is important to mention, however, that this third party insurance does not cover own damage to the vehicle that is caused by the driver.
Having insurance always seems like a good idea right after an accident. Of course, the downside is that is it involves regular payments. Compulsory car insurance means that car-owner’s wallets get a little lighter. However, there are certain methods that have been employed to make things more fair and manageable for car owners.
Many Governments have been experimenting with a compulsory car insurance plan that is paid through a petrol (gasoline) tax. This addresses the problem directly because you cannot have uninsured motorists, as long as they are buying petrol. Furthermore, the payment is based on the kilometres or miles driven, which increases the efficacy of the car insurance, because of the streamlined collection process. Overall this is a successful alternative to a standard car insurance payment plan.
Overall, insurance is meant to protect one from risk of loss, damage, and destruction of property or person. The insurer is paid to take the risk of the insured, for a fee, of course. With compulsory car insurance the choice to own and operate a car also involves choosing to pay for full, third party car insurance. It can be argued that this takes away some freedom of choice for a citizen, but then, it is meant for their protection.