Motor insurance was first launched in U. K.. The first car was manufactured in 1984and the first motor insurance policy was issued in 1985. It covered liabilities to third party. In 1889, accidental damage to car in 1901 burglary and fire were added. Thus the progress made is found is in comprehensive policy of today. In 1903, the car and General Insurance Corporation Ltd. Was started and many companies were started later. After World war, number of card and car accidents increased. The victims of the car accidents were not given any compensations. So the third party insurance was made mandatory (The Road Traffic Act 1930, 1934, and 1969) (In Motor Vehicles) Act was enacted in 1939. The act was the same as that of U. K. The only differences is that in U. K. tariff is withdrawn, but India�s tariff governs the insurance.
FUNDAMENTAL PRINCIPALS OF MOTOR INSURANCE
The basic principals applicable to motor insurance are the same as they are in property and liability insurance. But the applications of these principles to automobile insurance is accepted as a specialised problem requiring a special contract. However let us recall the principles below in brief: (1) Utmost good faith: Motor insurance contracts are contracts of utmost good faith . The proposer is liable to disclose all the material facts relating to the motor vehicle to insurer. For this purpose the proposer is a given a proposal from and he is asked to give answers for all the questions asked in it. The answers given by the proposer becomes warranties or promises. So the answers must be true to the language and must be correct. Any incorrect answer on any matter will make the contract viodable. Some examples of material facts are: the type of vehicle, the geographical area of use, the physical health of driver the driving history, traffic convictions and post loss experience etc. Many of these provisions are now regulated by motor vehicle Act 1939
. (2) INSURABLE INTEREST: It refers to legal right to insure. The essentials of insurable interest are: (a) Existence of motor vehicle exposed to damage or liability : (b) such motor vehicle must be the subject matter of insurance: and ( C ) the insured must be in such a position that he shall suffer by loss or damage or benefit by the safety of the motor vehicle. Generally the following parties are expected to have a
n insurable interest. (a) INSURED: As a owner of vehicle the insured suffers a loss if his vehicle is damaged or from a legal liability to third party who suffers a loss for his negligence. (B) OTHER THAN INSURED: The driver of the vehicle may create liability for insured. In effect, the insured becomes the agent for the drivers and insured indemnifies him. ( C ) FINANCIER: In hire purchase agreement, the financier�s interest is insurable. In case the vehicle is lost or damaged, the financier can get compensation.
(d) MOTOR TRADER: The garage proprietors as bailees have insurable interest for customer�s loss or damage. (3) INDEMNITY: The objects of this principle is to place the insured after a loss in the same financial position as far as possible, as he occupied immediately before the loss. The effect of this principle is to prevent the insured from making a profit out of his loss or gaining any benefits or advantage. Accordingly to this principle, the insurer is liable to pay the actual value of loss or sum insured whichever is less in case of total loss to insured. If old parts are replaced by new a suitable depreciation is charged on new parts. Insurer may repair or replace or pay cash as it likes. Liability to third party is limited to policy sum Legal costs are also indemnified.
(4) SUBROGATION AND CONTRIBUTION: Subrogation is transfer of rights and remedies of the insured to the insurer who has indemnified the insured in respect of the loss. It arises only when the third party is responsible for damage. Insurer may exercise the insured�s right to recover damages. Generally they the right arises after payment of damage. Contributions refers to sharing of damage between co-insurers. It is done in the proportion the insurer�s share bears to total sum of all insurers
(5) PROXIMATE CAUSE: The insurers are liable to pay compensations only if loss is caused by a peril most proximate or the nearest to damage and if it is insured against. It is applicable to third party claims also.
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