MOTOR-VEHICLE INSURANCE

also called Automotive Insurance, a contract by which the insurer assumes the risk of any loss the owner or operator of a motor vehicle may incur through damage to property or persons as the result of an accident. There are many specific forms of motor-vehicle insurance, varying not only in the kinds of risk that they cover but also in the legal principles underlying them. Liability insurance pays for damage to someone else's property or for injury to other persons resulting from an accident for which the insured is judged legally liable; collision insurance pays for damage to the insured car if it collides with another vehicle or object; comprehensive insurance pays for damage to the insured car resulting from fire or theft and also from many other causes; medical-payment insurance covers medical treatment for the policyholder and his passengers. In many countries, other approaches to automobile accident insurance have been tried. These include compulsory liability insurance on a no-fault basis and loss insurance (accident and property insurance) carried by the driver or owner on behalf of any potential victim, who would recover without regard to fault. Most existing no-fault plans are limited in the sense that they usually permit the insured party to sue the party at fault for damages in excess of those covered by the plan and permit insuring companies to recover costs from each other according to decisions on liability. Total no-fault insurance, on the other hand, would not permit the insured to enter tort liability actions or the insurer to recover costs from another insurer.