Most of the world’s vehicle owners must get third party insurance or CTP, whatever it’s called in their country. Germans call it Haftpflicht and Danes call it ansvarsforsikring. However, our review of CTP in nine randomly selected countries reveals a few interesting quirks.
|CTP in other countries|
|UK||Canada – Ontario||Russia|
|France||USA – New York, Lousiana||India|
Not mandatory in all countries
All countries studied, except South Africa, require third party insurance, or liability coverage or TPL. Some 65% of vehicles there are uninsured but a levy on fuel goes into a Road Accident Fund. The RAF pays out a percentage of compensation payable according to responsibility for the accident but does not cover damage to any type of property.
People or property?
CTP around the world differs in whether it pays for only people, or people and property. When it covers people and property, it is property of the third party only. Drivers must have another policy to cover their own property. For example, Own Damage policies in India will cover damage and losses to the insured vehicle. In China, mandatory insurance covers all property and life losses, except the owner of the car and passengers on board.
Everywhere in the US, except New Hampshire and Virginia, drivers must insure for bodily injury and third party property damage. However, the costs and limits of those insurances vary widely in each state. In Ontario, Canada, vehicle owners must by law have three types of Third Party Liability (TPL) cover: accident benefits, direct property damage and uninsured automobile coverage.
Vehicle or driver?
In France owners have to insure the car rather than the driver. In principle, this means anyone who drives that vehicle is insured. There are two types of collision liability: “assurance au tiers” (third party) or “assurance tous risques” (fully comprehensive).
In Switzerland, owners insure the person and the vehicle. As in Australia, premiums are based on personal details: age, gender, nationality, place of residence, accident and claim history, experience and projected mileage. However, if somebody else has an accident in that vehicle, the vehicle owner is liable.
Your fault or mine?
Fault is an important factor in our look at CTP in other countries. If an accident is somebody’s fault, it influences the amounts and types of compensation available. For example, New York has no-fault insurance, but fault counts in the UK. If it is:
Your fault: Your insurer pays to the third party any compensation for personal injury or vehicle damage.
Not your fault: The third party’s insurer pays compensation to you. You cannot claim for repairs on your own vehicle, even though it’s not your fault.
In New York, each type of mandatory insurance does a different job. Personal Injury Protection (PIP) is designed to be paid promptly, regardless of who is at fault. However, owners also need liability cover (bodily injury and property damage) and uninsured motorists cover.
One insurance in Russia
In Russia, third party liability insurance is called an OSAGO policy. Owners cannot register their car or pass a technical inspection without OSAGO. Voluntary or comprehensive insurance is called casco.
Bank of Russia is exploring the option of combining auto casco and OSAGO policies in one insurance product. The idea is to make it more convenient for the customer. Russia is also considering the 3-year option for OSAGO, as recently introduced in India.
Long-term CTP in India
India has just brought in a novel idea – long-term third party (TP) insurance. Long-term means 3 years for most vehicles and 5 years for two-wheelers. There are three options:
- Long-term cover (TP plus Own Damage) for 3 years
- Bundled cover (3 years plus 1-year OD) or
- Standalone TP cover (without OD) for 3 years.
Imagine if Australians had to pay 3 years ahead. Now that would give us something to complain about!
[Note: This is not an exhaustive study of CTP around the world. The selection was random and all comments are based on this small selection.]