What Is Liability Auto Insurance Coverage

The law recompenses the victim by penalizing the wrongdoer. Automobile liability insurance saves the wrongdoer by paying damages on his behalf and saves the victim at the same time by providing a sure satisfaction of his judgment. Continue reading our Insurance Blog to learn more.

It would appear to be merely an academic exercise to attempt to separate the two functions or to ascribe more importance to one than to the other. As a practical matter, however, it may be necessary to stress one aspect to the exclusion of the other. Insurance men look upon automobile liability insurance almost exclusively as protection for the insured motorist’s assets and earning power against the claims of third parties for injuries actually or allegedly sustained through the fault of the insured. As one writer recently put it, “All automobile liability insurance is self- protection. The purpose of automobile insurance is to protect the person who carries it, and not someone with whom he may collide.”

The insurance industry “manufactures” and distributes automobile liability insurance in the form of individual policies or contracts entered into between the insured motorist and the insurer. The motorist buys or is sold this contract in terms of his own interests. It is doubtful whether insurers have ever sold an automobile insurance policy as a public welfare measure. The injured victim is not a party to the contract.

The insured in most states is free to discontinue his liability insurance at any time he chooses without consulting the public’s interest. He continues to insure or not, as he views his need for liability protection against alternative uses for his premium money.
However, one might consider this hypothetical but decisive question: Suppose that all or a large proportion of motorists elected to discontinue their automobile liability insurance (outside the compulsory states of Massachusetts, New York, and North Carolina).

What would happen ? Undoubtedly, prompt legislative action would be taken to compel all motorists to insure. Why? To protect the uninsured motorist? Or to combat the rapid increase in uncompensated victims? The answer is self-evident.

The insurance man and the individual motorist will continue to look upon automobile liability insurance as “self-protection.” Society and its legislative representatives will look increasingly upon it as protection for the innocent accident victim under a legal system of recovery based on fault. However regarded by these several groups, the institution itself will remain what it has always been—a protection for both sides.

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