Why was system of car insurance introduced-

Why Was the System of Car Insurance Introduced?

Curious to know who built the system of car insurance? Want to know why it was introduced? Here, have a glimpse at the history of car insurance system.
Why was system of car insurance introduced-
Everyone who drives their car must be aware of the concept of car insurance. But, only a few would know the reason behind the start of the car insurance cover. Car insurance policies have history attached to them; it will be worthwhile to know about it.

The Beginning

The car insurance scheme first started in the United Kingdom in 1930 under the Road Traffic Act 1930. The system was mandatory for every car owner. They had to abide by this system if they wish to take their vehicles on roads. Since the start, third-party liability cover has been attached as a mandatory feature. The cover focused on the financial shield that car owners would get, in the case of damage.

The Post WWI Era

Post the era of the First World War; cars were used in all urban areas. With limited technology and medical facilities, it posed a threat to anyone driving on the road.
Earlier, the concept of the insurance policy was not in place. Hence, drivers had the risk of paying huge medical bills while the victim would have to face medical expenses. It has led to the introduction of Road Traffic Acts that would watch the way vehicles ply on the road. The idea was to compensate the driver, passengers or any third parties against any damage.

The Indian History of the Motor Vehicle Act

The Motor Vehicle Act first came into being in 1914, which was later replaced by Motor Vehicle Act 1939. The Act explained the guidelines and features of the motor insurance policy. It was then finally superseded by the Motor Vehicle Act 1988, which came into force on July 1st, 1989.

Inclusion of the Insurance Cover in the Motor Vehicle Act

The reason for all insurance covers is to provide financial coverage to the insured. Thus, insurance companies aimed at providing immediate relief to the victim. Although no amount can compensate an injury, it still comforts the family by reducing their financial burden.
The insurance cover was always a part of the new policy at the time of¬†purchasing a car. But, with time, many drivers did not feel the need to renew it due to their excellent driving skills. This still poses a threat to car owners in case of theft or a natural calamity. It’s required for the safety of the car, car owner and third-party individuals are also considered under one single cover.
The process of car renewal was mandatory considering the benefits an insured could derive out of it. You should understand while buying this cover; you are not only lessening the risk on you but also extending the benefits to a third party.
Read more about car insurance in India

Know More