History of vehicle insurance is as old as the age of insurance of modern form. But the form of motor insurance in the previous ages was not so sophisticated as practiced in the insurance market. Motor insurance insures motorized vehicles of all types and sizes such as cars, trucks, motorbike and other road vehicles. This insurance is also known as car insurance, vehicle insurance or auto insurance.
THE HISTORY OF MOTOR INSURANCE
Background of motor vehicle insurance:
According to Car Insurance Organisation of the USA, Just like the invention of fireworks, the concept of insuring vehicles can be traced to the Chinese as far back as 3000 B.C. Merchants sending boats up and down rivers in China would insure the goods on their boat, to protect against losses due to the boat sinking or being hijacked by pirates.
Motor insurance being one of the popular branches of modern insurance mechanism had its beginnings in the United Kingdom earlier in the nineteenth century. The first motor car was insured against motor car perils in London in 1894 to cover third party liabilities.
By 1899, accidental damage to the car was added to the policy.
By 1901, burglary, theft, and fire risks were added to the policy, thus the motor insurers started offering ‘comprehensive automobile insurance’ policy. Since then it is going on.
In 1903, the Car and General Insurance Corporation Ltd. was brought into light basically to issue auto insurance. Subsequently the number of auto insurers increases. Just After World War I, there was a significant development of the automobile industry in European Industrial Nations. As a result, there was a sizable increase in the number of vehicles on the road, so was the number of road accidents.
Many injured persons in road accidents were unable to recover damages because not all motorists were insured. This led to the introduction of compulsory third-party insurance through the passing of the Road Traffic Acts 1930 and 1934 in the UK. The compulsory insurance provisions of these Acts have been consolidated by the Road Traffic Act 1960.
In Bangladesh, the Motor Vehicles Act was passed in 1939 introducing the law relating to compulsory third-party insurance. The practice of motor insurance in Bangladesh generally follows that of the U.K. market. The business is governed by a tariff, whereas in the U.K. the Tariff has been withdrawn. Quite recently the Government of Bangladesh has introduced different road related legislation to facilitate auto insurance in the country.
In Bangladesh, the owner or driver of a car or bike must have to insure against their legal liability relating to passers-by and/or third-parties. Moreover; they can take insurance for the damage to the vehicle itself, which is usually termed as “OWN DAMAGE COVER” by the insurance practitioners in Bangladesh.
The Bangladeshi Act can be read online here for The Motor Vehicle Ordinance 1983.