Mandatory auto insurance: compensation for victims will double. What does this mean?

Auto insurance is essential primarily for the protection of individuals involved in traffic accidents (TAs). In simple terms, if you damage another vehicle, a store window, or other property while driving your car, and you are found at fault in the accident, the insurance company will compensate the affected parties within the limits of the insurance amount.

Mandatory auto insurance ensures compensation for damages if another road user is not found at fault in the accident.

The insurer commits to compensate for damages incurred as a result of an insured event, up to a specified amount known as the insurance premium.

Mandatory civil liability insurance for vehicle owners emerged in the 1920s in the USA and gained widespread popularity in Europe during the 1940s and 1950s (and later in other parts of the world). This type of insurance is associated with the risk of civil liability of the vehicle owner for harm caused to the life, health, or property of victims due to the use of the vehicle.

Mandatory auto insurance was introduced as a social measure aimed at creating financial guarantees for compensation for damages caused by vehicle owners, as well as a financial tool to enhance road safety. This type of insurance is in effect in many countries around the world, including transnational agreements known as the "green card."

The global practice of auto insurance has a rich history. For instance, the name of the first insured car is well-known. On February 1, 1898, three years after the invention of the automobile, American Martin Truman insured his car with Travelers Insurance Company.

Truman paid $12.25 for an insurance policy worth $500. The price of the policy was quite high, but one can understand Truman: at that time, cars were a luxury that only a few thousand people across the country could afford, whereas there were over 20 million horses. Truman feared collisions with this numerous "horse-drawn transport."

In the 1920s, the launch of Ford's assembly line changed everything. The sharp increase in the number of cars on the roads posed a real threat, necessitating insurance for potential damages. It was during this time that the idea of mandatory civil liability insurance for car owners emerged, in addition to voluntary insurance for the vehicles themselves. Massachusetts was the first to take action in this regard. In 1925, this state became the first to introduce mandatory insurance for all cars. Soon, other states followed suit. Auto insurance did not become a forgotten idea, as cars were still considered more of a luxury than a means of transportation, and no one wanted to bear significant losses due to their own or someone else's fault.

By the early 1950s, nearly all European countries had implemented mandatory civil liability insurance. It was also during this time that an international system for mutual recognition of insurance policies emerged—the "green card," named for the color of the first policies.

Despite nearly 100 years passing, most of the regulations remain relevant and are still in effect today.

In everyday life in Uzbekistan, one can find numerous mid-range and luxury vehicles, both produced domestically and imported from abroad.

According to the Statistical Agency, as of January 1, 2024, the number of vehicles owned by individuals in Uzbekistan amounted to 4 million 20 thousand 744 units. Over the year, this figure increased by almost 400 thousand. Notably, 93% of all vehicles owned by the population are passenger cars.

This increases traffic density on the roads and contributes to a rise in the number of traffic accidents. In the event of an accident, the repair costs for such vehicles often exceed the established amount, necessitating the recovery of the remaining sum from the liable party through civil proceedings.

According to the legislation, the amount of insurance compensation for harm caused to the life or health of the victim is 65% of the insurance premium, while for property damage, it is 35%. From this perspective, indexing the insurance premium from the current 40 million sums to 80 million sums will lead to a proportional increase in the amount of insurance compensation for harm caused to the life, health, or property of victims, effectively doubling it.