HISTORY OF MOTOR INSURANCE AND PRINCIPLES OF INSURANCE
History of Motor Insurance:
Motor insurance has a long history that dates back to the late 1800s. The first motor insurance policy was issued in 1895 by the Railway Passenger Assurance Company, which was later renamed as the Royal Automobile Club. In the early days, motor insurance was only offered to wealthy car owners, and policies were often written on a one-to-one basis.
As more people began to purchase cars, the demand for motor insurance increased, and by the 1930s, the concept of a standard motor insurance policy had emerged. In the UK, the Road Traffic Act of 1930 made it mandatory for all motorists to have third-party motor insurance.
Today, motor insurance is a highly competitive industry, with a wide range of policies and providers available to consumers.
Principles of Insurance:
The principles of insurance are a set of fundamental concepts that underpin the insurance industry. These principles include:
- Utmost Good Faith: This principle requires both the insurer and the insured to act in good faith and disclose all relevant information to each other.
- Insurable Interest: The insured must have an insurable interest in the subject matter of the insurance policy. This means that the insured must have a financial interest in the property or person being insured.
- Indemnity: The principle of indemnity states that the purpose of insurance is to compensate the insured for any loss or damage suffered, and not to provide a profit.
- Contribution: This principle applies when there are multiple insurance policies covering the same subject matter. In such cases, each insurer contributes proportionally to the loss or damage suffered.
- Subrogation: This principle allows the insurer to take legal action against any third party who is responsible for the loss or damage suffered by the insured.
- Proximate Cause: This principle requires that the loss or damage must be caused by a peril that is covered under the insurance policy.
- Mitigation: The insured has a duty to take reasonable steps to mitigate any loss or damage suffered, and the insurer is only liable for the amount of loss that could not be reasonably mitigated.
