Auto Insurance: Where Is It Mandatory Globally?

Auto insurance, also known as motor insurance or car insurance, is a requirement for drivers in almost every country. While the specific terms of auto insurance vary across different regions and jurisdictions, the primary use of auto insurance is to provide financial protection in the event of physical damage, bodily injury, or liability resulting from traffic collisions. In many places, it is compulsory to have auto insurance before using or keeping a vehicle on public roads, with the degree of insurance relating to both the car and the driver. This compulsory insurance often covers third-party liability, ensuring that victims of crashes are compensated and that drivers are covered for damage to their car and property.

Third-party liability insurance in Canada

Canada requires third-party liability insurance for drivers to be able to drive legally. This type of insurance covers the at-fault driver's medical expenses, property damage, and other injury-related costs. If the injured party's damages are not covered by the insurance policy, they can sue the at-fault driver to collect the remaining amount.

Third-party liability insurance is a mandatory component of auto insurance policies in Canada. It covers drivers if they are at fault in an accident and the other party is hurt or killed, or their property is damaged. This type of insurance is important as accidents can happen to anyone and can result in costly medical and legal fees. While it is mandatory across Canada, the minimum amount of coverage required varies by province/territory. For example, the minimum amount of third-party liability insurance in Canada is $200,000, except in Quebec, where it is $50,000, and in Nova Scotia, where it is $500,000.

In addition to third-party liability insurance, there are other mandatory coverages that are part of auto insurance policies in Canada. Accident benefits coverage is mandatory in all but two Canadian provinces and provides compensation for medical expenses, lost income, funeral expenses, and survivor benefits, regardless of who caused the accident. Uninsured auto insurance is also mandatory and protects drivers if they are in an accident with an uninsured driver or if the other driver leaves the scene (hit-and-run).

While the cost of third-party liability insurance can vary, it is typically included in standard insurance policies. The monthly average cost for auto insurance in Canada can range from $600 to more than $1,600, depending on the add-on coverages and other factors such as annual mileage and vehicle value.

Auto insurance in the UK

Vehicle insurance is mandatory in the UK. This means that all drivers in the UK, including non-UK citizens residing in the UK, are required to have car insurance. The legal minimum insurance requirement is third-party insurance, which covers damage or injury to any other person, vehicle, animal, or property in the event of an accident. It is important to note that third-party insurance does not cover the costs of repairing your own vehicle.

When it comes to expats or non-UK citizens living in the UK, it is essential to have the appropriate car insurance coverage. Expat car insurance is specifically designed to meet the needs of non-UK drivers, including those with foreign driving licenses. This type of insurance is necessary for expats who own or drive a car in the UK, regardless of how often they drive.

The cost of car insurance in the UK can vary depending on several factors, including the type of car, the driver's age, driving experience, and claims history. Additionally, the type of insurance policy chosen, such as comprehensive or third-party coverage, will also impact the overall cost.

It is worth noting that some insurance companies in the UK may not offer coverage to individuals with foreign driving licenses. In such cases, it is recommended to seek the assistance of an insurance broker or explore specialist insurance providers.

Furthermore, for individuals bringing their own car to the UK, it is important to ensure that the vehicle meets the necessary requirements, including valid registration, taxation, and an up-to-date MOT (Ministry of Transport) test. Failure to comply with these regulations can result in legal consequences.

Auto insurance in China

Auto insurance, or car insurance, in China is a mandatory requirement for all drivers. The People's Insurance Company of China (PICC) provided the first local car insurance in the country in 1950, ending a foreign monopoly. In 1988, auto insurance started to dominate the non-life insurance market in China, and in 2006, the Chinese government imposed mandatory regulations on drivers to purchase liability car insurance.

Traffic Compulsory Insurance

Traffic compulsory insurance is a type of liability policy that covers third-party injuries, deaths, and property damage in the event of an accident. This type of insurance follows the car rather than the driver, meaning that anyone with permission to drive the insured car is covered. The minimum requirements for this type of insurance are low and may not cover the full claim of even a minor accident, so many drivers choose to purchase additional third-party liability policies.

Third-Party Liability Insurance

Third-party liability insurance is similar to traffic compulsory insurance but allows drivers to choose their desired maximum rate of compensation, which can be much higher than the limit available under traffic compulsory insurance.

Other Types of Auto Insurance in China

In addition to the mandatory traffic compulsory insurance, drivers in China can also purchase several other types of auto insurance to increase their coverage:

• Vehicle damage insurance covers all damage to the car, regardless of the reason.
• Theft insurance covers the vehicle and its contents in the event of burglary or theft.
• Passenger insurance covers injuries to or the death of the policyholder's passengers and is sold per vehicle seat.
• Driver insurance covers injury to the driver and policyholder.
• Quota-free insurance covers the policyholder's 20% responsibility for compensation in an at-fault accident, meaning the insurance company will pay 100% of the compensation regardless of who is held responsible.

Auto insurance in Japan

Mandatory Car Liability Insurance

As the name suggests, this type of insurance is mandatory for all vehicle owners in Japan. This insurance covers liability in the event of an accident, but it does not include personal injuries and property damage. The coverage limit is set by law, and the benefits include:

• Up to 1.2 million JPY in case of injury
• Up to 30 million JPY in case of death
• Up to 40 million JPY in case of permanent disability

The premium for this insurance depends on the vehicle's use. For personal use vehicles, the premium is 17,650 JPY every two years, while for commercial vehicles, it is 17,540 JPY for the same period. It is important to note that failing to have this mandatory insurance can result in a prison sentence of up to one year or a fine of up to 500,000 JPY.

Optional Car Insurance

Optional car insurance, or Ninni Hoken, covers additional aspects that are not included in the mandatory insurance. This includes property damage, physical injury to pedestrians due to accidents, theft, and natural disasters. There are two ways to purchase this type of insurance: online or through an insurance specialist/agent. Buying insurance online tends to be cheaper and offers the convenience of comparing different options. On the other hand, an insurance agent can explain the details and help you decide what is best for your needs.

Choosing the Right Insurance

When choosing car insurance in Japan, it is important to consider your circumstances, including age, driving record, type of car, and how often it is driven. Additionally, it is crucial to understand the options available to ensure you get the coverage you need. For example, if your car is over six years old, you may not need to insure it for the full cost of replacement as the value of the vehicle may have significantly decreased.

The Claims Process

It is worth noting that accidents in Japan are rarely found to be entirely the fault of one party, unless one vehicle is stationary. As a result, using your insurance to cover minor incidents can lead to higher premiums and a lower rating within the system. This can make it more challenging to find affordable coverage. Therefore, it may be advisable to pay out of pocket for minor incidents to maintain a good insurance record.

Language Barrier

Another important consideration for foreigners is the language barrier. Insurance policies are complex, and it is a legal requirement for the signee to understand the policy in Japanese. Some workarounds include having a family member or relative who speaks Japanese sign the policy or purchasing the insurance under a spouse's name if they are fluent in Japanese. However, it is essential to communicate in Japanese with the insurance company in the event of an accident or emergency.

Auto insurance in the US

In the US, auto insurance requirements vary from state to state. For example, in Louisiana, auto insurance follows the car rather than the driver. This means that if a car owner lends their car to a friend, their insurance policy will cover that friend. Louisiana law requires all drivers to carry liability insurance, which covers $15,000 in bodily injury per person and $30,000 per accident, as well as $25,000 in property damage. Driving without insurance in Louisiana can result in fines ranging from $500 to $1,000, and the car may be impounded.

Louisiana also has a unique "No Pay, No Play" law, which means that uninsured drivers cannot collect the first $25,000 in property damage and $15,000 in personal injury, even if they are not at fault in an accident.

While each state has its own requirements, there are some standard types of auto insurance coverage in the US. Liability insurance is one of the most common and covers the other party's property damage and injuries if the policyholder is at fault in an accident. Collision coverage pays for damage to the policyholder's car in the event of a collision, while comprehensive coverage includes protection against theft, vandalism, and natural disasters.

In addition to mandatory insurance requirements, there are also optional coverages that drivers can choose to add to their policies. These may include rental reimbursement, which covers the cost of a rental car while the policyholder's vehicle is being repaired, and roadside assistance, which provides services like towing and jump-starting.

While the specific laws and regulations surrounding auto insurance in the US can vary by state, it is generally a requirement for drivers to have some form of liability coverage to protect themselves and others in the event of an accident.

Frequently asked questions