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A representation of the exchanges of energy between the source (the Sun), the Earth's surface, the Earth's atmosphere, and the ultimate sink outer space. The ability of the atmosphere to capture and recycle energy emitted by the Earth surface is the defining characteristic of the greenhouse effect.

Another diagram of the greenhouse effect

The greenhouse effect is a process by which thermal radiation from a planetary surface is absorbed by atmospheric greenhouse gases, and is re-radiated in all directions. Since part of this re-radiation is back towards the surface and the lower atmosphere, it results in an elevation of the average surface temperature above what it would be in the absence of the gases.^[1][2]

Solar radiation at the frequencies of visible light largely passes through the atmosphere to warm the planetary surface, which then emits this energy at the lower frequencies of infrared thermal radiation. Infrared radiation is absorbed by greenhouse gases, which in turn re-radiate much of the energy to the surface and lower atmosphere. The mechanism is named after the effect of solar radiation passing through glass and warming a greenhouse, but the way it retains heat is fundamentally different as a greenhouse works by reducing airflow, isolating the warm air inside the structure so that heat is not lost by convection.^[2][3][4]

If an ideal thermally conductive blackbody were the same distance from the Sun as the Earth is, it would have a temperature of about 5.3 °C. However, since the Earth reflects about 30%^[5][6] of the incoming sunlight, this idealized planet's effective temperature (the temperature of a blackbody that would emit the same amount of radiation) would be about −18 °C.^[7][8] The surface temperature of this hypothetical planet is 33 °C below Earth's actual surface temperature of approximately 14 °C.^[9] The mechanism that produces this difference between the actual surface temperature and the effective temperature is due to the atmosphere and is known as the greenhouse effect.^[10]

Earth’s natural greenhouse effect makes life as we know it possible. However, human activities, primarily the burning of fossil fuels and clearing of forests, have intensified the natural greenhouse effect, causing global warming.^[11]

Contents

• 1 History
• 2 Mechanism
• 3 Greenhouse gases
• 4 Role in climate change
• 5 Real greenhouses
• 6 Bodies other than Earth
• 7 See also
• 8 References
• 9 Further reading
• 10 External links

History

Main article: History of climate change science

The existence of the greenhouse effect was argued for by Joseph Fourier in 1824. The argument and the evidence was further strengthened by Claude Pouillet in 1827 and 1838, and reasoned from experimental observations by John Tyndall in 1859, and more fully quantified by Svante Arrhenius in 1896.^[12][13]

In 1917 Alexander Graham Bell wrote “[The unchecked burning of fossil fuels] would have a sort of greenhouse effect”, and “The net result is the greenhouse becomes a sort of hot-house.”^[14][15] Bell went on to also advocate for the use of alternate energy sources, such as solar energy.^[16]

Mechanism

The Earth receives energy from the Sun in the form UV, visible, and near IR radiation, most of which passes through the atmosphere without being absorbed. Of the total amount of energy available at the top of the atmosphere (TOA), about 50% is absorbed at the Earth's surface. Because it is warm, the surface radiates far IR thermal radiation that consists of wavelengths that are predominantly much longer than the wavelengths that were absorbed (the overlap between the incident solar spectrum and the terrestrial thermal spectrum is small enough to be neglected for most purposes). Most of this thermal radiation is absorbed by the atmosphere and re-radiated both upwards and downwards; that radiated downwards is absorbed by the Earth's surface. This trapping of long-wavelength thermal radiation leads to a higher equilibrium temperature than if the atmosphere were absent.

This highly simplified picture of the basic mechanism needs to be qualified in a number of ways, none of which affect the fundamental process.

The solar radiation spectrum for direct light at both the top of the Earth's atmosphere and at sea level

Synthetic stick absorption spectrum of a simple gas mixture corresponding to the Earth's atmosphere composition based on HITRAN data ^[17] created using Hitran on the Web system.^[18] Green color - water vapor, red - carbon dioxide, WN - wavenumber (caution: lower wavelengths on the right, higher on the left).

• The incoming radiation from the Sun is mostly in the form of visible light and nearby wavelengths, largely in the range 0.2–4 μm, corresponding to the Sun's radiative temperature of 6,000 K.^[19] Almost half the radiation is in the form of "visible" light, which our eyes are adapted to use.^[20]
• About 50% of the Sun's energy is absorbed at the Earth's surface and the rest is reflected or absorbed by the atmosphere. The reflection of light back into space—largely by clouds—does not much affect the basic mechanism; this light, effectively, is lost to the system.
• The absorbed energy warms the surface. Simple presentations of the greenhouse effect, such as the idealized greenhouse model, show this heat being lost as thermal radiation. The reality is more complex: the atmosphere near the surface is largely opaque to thermal radiation (with important exceptions for "window" bands), and most heat loss from the surface is by sensible heat and latent heat transport. Radiative energy losses become increasingly important higher in the atmosphere largely because of the decreasing concentration of water vapor, an important greenhouse gas. It is more realistic to think of the greenhouse effect as applying to a "surface" in the mid-troposphere, which is effectively coupled to the surface by a lapse rate.
• The simple picture assumes a steady state. In the real world there is the diurnal cycle as well as seasonal cycles and weather. Solar heating only applies during daytime. During the night, the atmosphere cools somewhat, but not greatly, because its emissivity is low, and during the day the atmosphere warms. Diurnal temperature changes decrease with height in the atmosphere.
• Within the region where radiative effects are important the description given by the idealized greenhouse model becomes realistic: The surface of the Earth, warmed to a temperature around 255 K, radiates long-wavelength, infrared heat in the range 4–100 μm.^[19] At these wavelengths, greenhouse gases that were largely transparent to incoming solar radiation are more absorbent.^[19] Each layer of atmosphere with greenhouses gases absorbs some of the heat being radiated upwards from lower layers. It re-radiates in all directions, both upwards and downwards; in equilibrium (by definition) the same amount as it has absorbed. This results in more warmth below. Increasing the concentration of the gases increases the amount of absorption and re-radiation, and thereby further warms the layers and ultimately the surface below.^[8]
• Greenhouse gases—including most diatomic gases with two different atoms (such as carbon monoxide, CO) and all gases with three or more atoms—are able to absorb and emit infrared radiation. Though more than 99% of the dry atmosphere is IR transparent (because the main constituents—N₂, O₂, and Ar—are not able to directly absorb or emit infrared radiation), intermolecular collisions cause the energy absorbed and emitted by the greenhouse gases to be shared with the other, non-IR-active, gases.

Greenhouse gases

Main article: Greenhouse gas

By their percentage contribution to the greenhouse effect on Earth the four major gases are:^[21][22]

• water vapor, 36–70%
• carbon dioxide, 9–26%
• methane, 4–9%
• ozone, 3–7%

The major non-gas contributor to the Earth's greenhouse effect, clouds, also absorb and emit infrared radiation and thus have an effect on radiative properties of the atmosphere.^[22]

Role in climate change

Main article: Global warming

The Keeling Curve of atmospheric CO₂ concentrations measured at Mauna Loa Observatory.

Atmospheric gases only absorb some wavelengths of energy but are transparent to others. The absorption patterns of water vapor (blue peaks) and carbon dioxide (pink peaks) overlap in some wavelengths. Carbon dioxide is not as strong a greenhouse gas as water vapor, but it absorbs energy in wavelengths (12-15 micrometers) that water vapor does not, partially closing the “window” through which heat radiated by the surface would normally escape to space. (Illustration NASA, Robert Rohde)^[23]

Strengthening of the greenhouse effect through human activities is known as the enhanced (or anthropogenic) greenhouse effect.^[24] This increase in radiative forcing from human activity is attributable mainly to increased atmospheric carbon dioxide levels.^[25] According to the latest Assessment Report from the Intergovernmental Panel on Climate Change, "most of the observed increase in globally averaged temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations".^[26]

CO₂ is produced by fossil fuel burning and other activities such as cement production and tropical deforestation.^[27] Measurements of CO₂ from the Mauna Loa observatory show that concentrations have increased from about 313 ppm^[28] in 1960 to about 389 ppm in 2010. It reached the 400ppm milestone on May 9, 2013.^[29] The current observed amount of CO₂ exceeds the geological record maxima (~300 ppm) from ice core data.^[30] The effect of combustion-produced carbon dioxide on the global climate, a special case of the greenhouse effect first described in 1896 by Svante Arrhenius, has also been called the Callendar effect.

Over the past 800,000 years,^[31] ice core data shows that carbon dioxide has varied from values as low as 180 parts per million (ppm) to the pre-industrial level of 270ppm.^[32] Paleoclimatologists consider variations in carbon dioxide concentration to be a fundamental factor influencing climate variations over this time scale.^[33][34]

Real greenhouses

A modern Greenhouse in RHS Wisley

The "greenhouse effect" of the atmosphere is named by analogy to greenhouses which get warmer in sunlight, but the mechanism by which the atmosphere retains heat is different.^[35] A greenhouse works primarily by allowing sunlight to warm surfaces inside the structure, but then preventing absorbed heat from leaving the structure through convection, i.e. sensible heat transport. The "greenhouse effect" heats the Earth because greenhouse gases absorb outgoing radiative energy, heating the atmosphere which then emits radiative energy with some of it going back towards the Earth.

A greenhouse is built of any material that passes sunlight, usually glass, or plastic. It mainly heats up because the Sun warms the ground inside, which then warms the air in the greenhouse. The air continues to heat because it is confined within the greenhouse, unlike the environment outside the greenhouse where warm air near the surface rises and mixes with cooler air aloft. This can be demonstrated by opening a small window near the roof of a greenhouse: the temperature will drop considerably. It has also been demonstrated experimentally (R. W. Wood, 1909) that a "greenhouse" with a cover of rock salt (which is transparent to infra red) heats up an enclosure similarly to one with a glass cover.^[3] Thus greenhouses work primarily by preventing convective cooling.^[4][36]

In contrast, the greenhouse effect heats the Earth because rather than retaining (sensible) heat by physically preventing movement of the air, greenhouse gases act to warm the Earth by re-radiating some of the energy back towards the surface. This process may exist in real greenhouses, but is comparatively unimportant there.

Bodies other than Earth

In the Solar System, Mars, Venus, and the moon Titan also exhibit greenhouse effects; that on Venus is particularly large, due to its atmosphere, which consists mainly of dense carbon dioxide.^[37] Titan has an anti-greenhouse effect, in that its atmosphere absorbs solar radiation but is relatively transparent to infrared radiation. Pluto also exhibits behavior superficially similar to the anti-greenhouse effect.^[38][39]

A runaway greenhouse effect occurs if positive feedbacks lead to the evaporation of all greenhouse gases into the atmosphere.^[40] A runaway greenhouse effect involving carbon dioxide and water vapor is thought to have occurred on Venus.

 

Vehicle insurance (also known as, GAP insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from the specific terms of vehicle insurance vary with legal regulations in each region. To a lesser degree vehicle insurance may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from things other than traffic collisions.

History

Widespread use of the automobile began after the First World War in the cities. Cars were relatively fast and dangerous by that stage, yet there was still no compulsory form of car insurance anywhere in the world. This meant that injured victims would seldom get any compensation in an accident, and drivers often faced considerable costs for damage to their car and property.

A compulsory car insurance scheme was first introduced in the United Kingdom with the Road Traffic Act 1930. This ensured that all vehicle owners and drivers had to be insured for their liability for injury or death to third parties whilst their vehicle was being used on a public road.^{[citation needed]} Germany enacted similar legislation in 1939.

Public policies

In many jurisdictions it is compulsory to have vehicle insurance before using or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver, however the degree of each varies greatly.

Several jurisdictions have experimented with a "pay-as-you-drive" insurance plan which is paid through a gasoline tax (petrol tax). This would address issues of uninsured motorists and also charge based on the miles (kilometers) driven, which could theoretically increase the efficiency of the insurance, through streamlined collection.^[1]

Australia

In Australia CTP is a state based scheme and only covers personal injury liability.

Comprehensive and Third Party Property insurance is sold separately to cover property damage and cover can be for events such as fire, theft, collision and other property damage.

Third Party Property Insurance covers damage to someone else's property or vehicle, but not your own vehicle.

Third Party Property Insurance with Fire and Theft is the same as above, but will cover your vehicle in the event of fire or theft up to the value stated on the policy

Comprehensive Insurance covers damage to your own property or vehicle as well as someone else's.

CTP

Compulsory Third Party Personal Injury Insurance is commonly known as CTP insurance, and is linked to the registration of a vehicle. It travels with the vehicle ownership when a vehicle is sold and already registered. CTP insurance does not cover vehicle damage, it covers the vehicle owner and any person who drives the vehicle against claims for liability in respect of the death or injury to people caused by the fault of the owner or driver. It covers the cost of all reasonable medical treatment for injuries received in the accident, loss of wages, cost of care services and in some cases compensation for pain and suffering.

In New South Wales and the Northern Territory Compulsory Third Party Insurance (commonly known as CTP Insurance) is a mandatory requirement and each individual car must be insured when registered. A 'Greenslip,'^[2] another name by which CTP Insurance is commonly known due to the colour of the form, must be obtained through one of the five licenced insurers in New South Wales. Suncorp and Allianz both hold two licences to issue CTP Greenslips – Suncorp under the GIO and AAMI licences and Allianz under the Allianz and CIC/Allianz licences. The remaining three licences to issue CTP Greenslips are held by QBE, Zurich and Insurance Australia Limited (NRMA). APIA and Shannons and InsureMyRide Insurance also supply CTP insurance licenced by GIO. In addition to the Greenslip, an additional car insurance can be purchased through insurers in Australia. This will cover claims that the standard CTP insurance cannot provide. This is known as a comprehensive car insurance.^{[citation needed]}

A similar scheme applies in the Australian Capital Territory through AAMI, GIO and NRMA (IAL).

In Victoria, Third Party Personal insurance from the Transport Accident Commission is similarly included, through a levy, in the vehicle registration fee. A similar scheme exists in Tasmania through the Motor Accidents Insurance Board.

In Queensland, CTP is a mandatory part of registration for a vehicle. There is choice of insurer but price is government controlled in a tight band.

In South Australia, Third Party Personal insurance from the Motor Accident Commission is included in the licence registration fee for people over 17. A similar scheme applies in Western Australia.

Canada

Several Canadian provinces (British Columbia, Saskatchewan, Manitoba and Quebec) provide a public auto insurance system while in the rest of the country insurance is provided privately. Basic auto insurance is mandatory throughout Canada with each province's government determining which benefits are included as minimum required auto insurance coverage and which benefits are options available for those seeking additional coverage. Accident benefits coverage is mandatory everywhere except for Newfoundland and Labrador. All provinces in Canada have some form of no-fault insurance available to accident victims. The difference from province to province is the extent to which tort or no-fault is emphasized. International drivers entering Canada are permitted to drive any vehicle their licence allows for the 3-month period for which they are allowed to use their international licence. International laws provide visitors to the country with an International Insurance Bond (IIB) until this 3-month period is over in which the international driver must provide themselves with Canadian Insurance. The IIB is reinstated every time the international driver enters the country. Damage to the driver's own vehicle is optional – one notable exception to this is in Saskatchewan, where SGI provides collision coverage (less than a $1000 deductible, such as a collision damage waiver) as part of its basic insurance policy. In Saskatchewan, residents have the option to have their auto insurance through a tort system but less than 0.5% of the population have taken this option.^[3]

Germany

International Motor Insurance Card (IVK)

Since 1939, it has been compulsory to have third party personal insurance before keeping a motor vehicle in all federal states of Germany. In addition, every vehicle owner is free to take out a comprehensive insurance policy. All types of car insurances are provided by several private insurers. The amount of insurance contribution is determined by several criteria, like the region, the type of car or the personal way of driving.^[4]

The minimum coverage defined by German law for car liability insurance / third party personal insurance is: 7.5 million euro for bodily injury (damage to people), 1 million euro for property damage and 50,000 euro for financial/fortune loss which is in no direct or indirect coherence with bodily injury or property damage. Insurance companies usually offer all-in/combined single limit insurances of 50 Million Euro or 100 Million Euro (about 141 Million Dollar) for bodily injury, property damage and other financial/fortune loss (usually with a bodily injury coverage limitation of 8 to 15 million euro for EACH bodily injured person).

Hungary

Third-party vehicle insurance is mandatory for all vehicles in Hungary. No exemption is possible by money deposit. The premium covers all damage up to HUF 500M (about €1.8M) per accident without deductible. The coverage is extended to HUF 1,250M (about €4.5M) in case of personal injuries. Vehicle insurance policies from all EU-countries and some non-EU countries are valid in Hungary based on bilateral or multilateral agreements. Visitors with vehicle insurance not covered by such agreements are required to buy a monthly, renewable policy at the border.^[5]

Indonesia

Third-party vehicle Insurance is a mandatory requirement in Indonesia and each individual car and motorcycle must be insured or the vehicle will not be considered legal. Therefore, a motorist cannot drive the vehicle until it is insured. Third Party vehicle insurance is included through a levy in the vehicle registration fee which is paid to government institution that known as "Samsat". Third-Party Vehicle Insurance is regulated under Act No. 34 Year 1964 Re: Road Traffic Accident Fund and merely covers Bodily injury, and managed by a SOE named PT. Jasa Raharja (Persero).^[6]

India

A Sample Vehicle Insurance Certificate in India

Auto Insurance in India deals with the insurance covers for the loss or damage caused to the automobile or its parts due to natural and man-made calamities. It provides accident cover for individual owners of the vehicle while driving and also for passengers and third party legal liability. There are certain general insurance companies who also offer online insurance service for the vehicle.

Auto Insurance in India is a compulsory requirement for all new vehicles used whether for commercial or personal use. The insurance companies have tie-ups with leading automobile manufacturers. They offer their customers instant auto quotes. Auto premium is determined by a number of factors and the amount of premium increases with the rise in the price of the vehicle. The claims of the Auto Insurance in India can be accidental, theft claims or third party claims. Certain documents are required for claiming Auto Insurance in India, like duly signed claim form, RC copy of the vehicle, Driving license copy, FIR copy, Original estimate and policy copy.

There are different types of Auto Insurance in India :

Private Car Insurance – In the Auto Insurance in India, Private Car Insurance is the fastest growing sector as it is compulsory for all the new cars. The amount of premium depends on the make and value of the car, state where the car is registered and the year of manufacture.

Two Wheeler Insurance – The Two Wheeler Insurance under the Auto Insurance in India covers accidental insurance for the drivers of the vehicle. The amount of premium depends on the current showroom price multiplied by the depreciation rate fixed by the Tariff Advisory Committee at the time of the beginning of policy period.

Commercial Vehicle Insurance – Commercial Vehicle Insurance under the Auto Insurance in India provides cover for all the vehicles which are not used for personal purposes, like the Trucks and HMVs. The amount of premium depends on the showroom price of the vehicle at the commencement of the insurance period, make of the vehicle and the place of registration of the vehicle. The auto insurance generally includes:

• Loss or damage by accident, fire, lightning, self ignition, external explosion, burglary, housebreaking or theft, malicious act.
• Liability for third party injury/death, third party property and liability to paid driver
• On payment of appropriate additional premium, loss/damage to electrical/electronic accessories

The auto insurance does not include:

• Consequential loss, depreciation, mechanical and electrical breakdown, failure or breakage
• When vehicle is used outside the geographical area
• War or nuclear perils and drunken driving.

Ireland

The Road Traffic Act, 1933 requires all drivers of mechanically propelled vehicles in public places to have at least third-party insurance, or to have obtained exemption – generally by depositing a (large) sum of money with the High Court as a guarantee against claims. In 1933 this figure was set at £15,000.^[7] The Road Traffic Act, 1961^[8] (which is currently in force) repealed the 1933 act but replaced these sections with functionally identical sections.

From 1968, those making deposits require the consent of the Minister for Transport to do so, with the sum specified by the Minister.

Those not exempted from obtaining insurance must obtain a certificate of insurance from their insurance provider, and display a portion of this (an insurance disc) on their vehicles windscreen (if fitted). The certificate in full must be presented to a police station within ten days if requested by an officer. Proof of having insurance or an exemption must also be provided to pay for the motor tax.

Those injured or suffering property damage/loss due to uninsured drivers can claim against the Motor Insurance Bureau of Ireland's uninsured drivers fund, as can those injured (but not those suffering damage or loss) from hit and run offences.

New Zealand

Within New Zealand, the Accident Compensation Corporation (ACC) provides nationwide no-fault personal injury insurance.^[9] Injuries involving motor vehicles operating on public roads are covered by the Motor Vehicle Account, for which premiums are collected through levies on petrol and through vehicle licensing fees.^[10]

Norway

In Norway, the vehicle owner must provide the minimum of liability insurance for his vehicle(s) – of any kind. Otherwise, the vehicle is illegal to use. If a person drives a vehicle belonging to someone else, and has an accident, the insurance will cover for damage done.

Romania

Romanian law mandates Răspundere Auto Civilă, a motor-vehicle liability insurance for all vehicle owners to cover damages to third parties.^[11]

South Africa

South Africa allocates a percentage of the money from gasoline into the Road Accident Fund, which goes towards compensating third parties in accidents.^[12][13]

United Arab Emirates

When buying car insurance in the United Arab Emirates, traffic department require a 13-month insurance certificate each time you register or renew a vehicle registration.

United Kingdom

Uninsured cars seized by Merseyside Police on display outside the force's headquarters in 2006

In 1930, the UK government introduced a law that required every person who used a vehicle on the road to have at least third-party personal injury insurance. Today, UK law is defined by the Road Traffic Act 1988,^[14] which was last modified in 1991. The Act requires that motorists either be insured, have a security, or have made a specified deposit (£500,000 in 1991) with the Accountant General of the Supreme Court, against their liability for injuries to others (including passengers) and for damage to other persons' property, resulting from use of a vehicle on a public road or in other public places.

It is an offense to use a car, or allow others to use it, without the insurance that satisfies the act whilst on the public highway (or public place Section 143(1)(a) RTA 1988 as amended 1991); however, no such legislation applies on private land. Police have the power to seize vehicles that do not have the necessary insurance in place. A driver caught driving without the necessary insurance for that vehicle will be prosecuted by the police and will receive either a fixed penalty or magistrate courts penalty. If convicted the driver will receive an IN10 endorsement on their licence.^{[citation needed]}

Road Traffic Act Only Insurance differs from Third Party Only Insurance (detailed below) and is not often sold. It provides the very minimum cover to satisfy the requirements of the Act. For example Road Traffic Act Only Insurance has a limit of £1,000,000 for damage to third party property – third party only insurance typically has a greater limit for third party property damage. As a result of costly claims, insurance companies can now no longer place a limit on the amount that they are liable for in the event of a claim by 3rd parties against a legitimate policy. This can be explained in part by the Great Heck Rail Crash that cost the insurers over £22 million in compensation for the fatalities and damage to property caused by the actions of the insured driver of a motor vehicle that caused the disaster.

The minimum level of insurance cover commonly available, and which satisfies the requirement of the Act, is called third party only insurance. The level of cover provided by Third party only insurance is basic, but does exceed the requirements of the act. This insurance covers any liability to third parties, but does not cover any other risks.

More commonly purchased is third party, fire and theft. This covers all third party liabilities and also covers the vehicle owner against the destruction of the vehicle by fire (whether malicious or due to a vehicle fault) and theft of the vehicle itself. It may or may not cover vandalism. This kind of insurance and the two preceding types do not cover damage to the vehicle caused by the driver or other hazards.

Comprehensive insurance covers all of the above and damage to the vehicle caused by the driver themselves, as well as vandalism and other risks. This is usually the most expensive type of insurance. For valuable cars, many insurers only offer comprehensive insurance.

Vehicles that are exempt from the requirement to be covered under the Act include those owned by certain councils and local authorities, national park authorities, education authorities, police authorities, fire authorities, health service bodies and security services.

The insurance certificate or cover note issued by the insurance company constitutes legal evidence that the vehicle specified on the document is insured. The law says that an authorised person, such as a police officer, may require a driver to produce an insurance certificate for inspection. If the driver cannot show the document immediately on request, and proof of insurance cannot be found by other means such as the Police National Computer, drivers are no longer issued a HORT/1. This was an order with seven days, from midnight of the date of issue, to take a valid insurance certificate (and usually other driving documents as well) to a police station of the driver's choice. Failure to produce an insurance certificate is an offence. The HORT/1 was commonly known – even by the issuing authorities when dealing with the public – as a "Producer".

Insurance is more expensive in Northern Ireland than in other parts of the UK.^{[vague][citation needed]} In 2010 the cost of car insurance rose by an average of 33%.^[15]

Prior to 1 October 2014, all motorists in the UK were required to prominently display a vehicle excise licence (tax disc) on their vehicle when it was kept or driven on public roads. This helped to ensure that most people had adequate insurance on their vehicles because insurance cover was required to purchase a disc, although the insurance must merely have been valid at the time of purchase and not necessarily for the life of the tax disc.^[16] Post 1 October 2014 it is no longer a requirement to display a vehicle excise licence (tax disc) on a vehicle.^[17]

The Motor Insurers' Bureau (MIB) compensates the victims of road accidents caused by uninsured and untraced motorists. It also operates a number of Motor Insurance Databases, which contain details of every insured vehicle in the country and acts as a means to share information between Insurance Companies.

On 1 March 2011 the European Court of Justice in Luxembourg ruled that gender could no longer be used by insurers to set car insurance premiums. The new ruling will come into action from December 2012.^{[citation needed]}

In June 2011 a new law known as Continuous Insurance Enforcement came into force in the UK meaning that a vehicle must have a valid insurance policy if it has a tax disc, whether or not it is kept on public roads and whether or not it is driven.^[18] If the car is to be "laid up" for whatever reason, the tax disc must be surrendered and a SORN declaration completed to say that it is off the public roads.

Investigation into repair costs & fraudulent claims

In September 2012 it was announced that the Competition Commission had launched an investigation into the UK system for credit repairs and credit hire of an alternative vehicle by a 3rd party following a non-fault accident. It was announced that insurers of vehicles that had caused a valid claim were unable to control the costs that were applied to the claim by means of repairs, storage, vehicle hire, referral fees and personal injury claims. Many accident management companies will take over the running of a non fault claim and arrange everything for the 3rd party. The subsequent cost of some items submitted for consideration has been a cause for concern over recent years and this has caused an increase in the premium costs. Also, the recent craze of "Cash for crash" has substantially raised the cost of policies. This is where two parties arrange a collision between their vehicles and one driver making excessive claims for damage and non existent injuries to themselves and the passengers that they had arranged to be "in the vehicle" at the time of the collision. Another recent development has seen crashes being caused delibarately by a driver "slamming" on their brakes so that the driver behind impacts them, this is usually carried out at roundabout junctions, when the following driver is looking to the right for oncoming traffic and does not notice that the vehicle in front has suddenly stopped for no reason.

United States

Main article: Vehicle insurance in the United States

The regulations for vehicle insurance differ with each of the 50 US states and other territories, with each U.S. state having its own mandatory minimum coverage requirements (see separate main article). Each of the 50 U.S. states and the District of Columbia requires drivers to have insurance coverage for both bodily injury and property damage, but the minimum amount of coverage required by law varies by state. For example, minimum bodily injury liability coverage requirements range from $20,000 in Florida to $100,000 in Alaska and Maine, while minimum property damage liability requirements range from $5,000 (four states) to $25,000 (16 states).^[19]

Coverage levels

Vehicle insurance can cover some or all of the following items:

• The insured party (medical payments)
• The insured vehicle (physical damage)
• Third parties (car and people, property damage and bodily injury)
• Third party, fire and theft
• In some jurisdictions coverage for injuries to persons riding in the insured vehicle is available without regard to fault in the auto accident (No Fault Auto Insurance)
• The cost to rent a vehicle if yours is damaged.
• The cost to tow your vehicle to a repair facility.
• Accidents involving uninsured motorists.

Different policies specify the circumstances under which each item is covered. For example, a vehicle can be insured against theft, fire damage, or accident damage independently.

Excess

An excess payment, also known as a deductible, is a fixed contribution that must be paid each time a car is repaired with the charges billed to an automotive insurance policy. Normally this payment is made directly to the accident repair "garage" (the term "garage" refers to an establishment where vehicles are serviced and repaired) when the owner collects the car. If one's car is declared to be a "write off" (or "totaled"), then the insurance company will deduct the excess agreed on the policy from the settlement payment it makes to the owner.

If the accident was the other driver's fault, and this fault is accepted by the third party's insurer, then the vehicle owner may be able to reclaim the excess payment from the other person's insurance company.

Compulsory excess

A compulsory excess is the minimum excess payment the insurer will accept on the insurance policy. Minimum excesses vary according to the personal details, driving record and the insurance company.

Voluntary excess

To reduce the insurance premium, the insured party may offer to pay a higher excess (deductible) than the compulsory excess demanded by the insurance company. The voluntary excess is the extra amount, over and above the compulsory excess, that is agreed to be paid in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by the insurer, the insurer is able to offer a significantly lower premium.

Basis of premium charges

Main article: auto insurance risk selection

Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company, in accordance with a framework of regulations set by the government. Often, the insurer will have more freedom to set the price on physical damage coverages than on mandatory liability coverages.

When the premium is not mandated by the government, it is usually derived from the calculations of an actuary, based on statistical data. The premium can vary depending on many factors that are believed to have an impact on the expected cost of future claims.^[20] Those factors can include the car characteristics, the coverage selected (deductible, limit, covered perils), the profile of the driver (age, gender, driving history) and the usage of the car (commute to work or not, predicted annual distance driven).^[21]

Gender

On 1 March 2011, the European Court of Justice decided insurance companies who used gender as a risk factor when calculating insurance premiums were breaching EU equality laws.^[22] The Court ruled that car-insurance companies were discriminating against men.^[22]

Age

Teenage drivers who have no driving record will have higher car insurance premiums. However, young drivers are often offered discounts if they undertake further driver training on recognized courses, such as the Pass Plus scheme in the UK. In the US many insurers offer a good-grade discount to students with a good academic record and resident-student discounts to those who live away from home. Generally insurance premiums tend to become lower at the age of 25. Some insurance companies offer "stand alone" car insurance policies specifically for teenagers with lower premiums. By placing restrictions on teenagers' driving (forbidding driving after dark, or giving rides to other teens, for example), these companies effectively reduce their risk.^[23]

Senior drivers are often eligible for retirement discounts, reflecting the lower average miles driven by this age group. However, rates may increase for senior drivers after age 65, due to increased risk associated with much older drivers. Typically, the increased risk for drivers over 65 years of age is associated with slower reflexes, reaction times, and being more injury-prone.^{[citation needed]}

U.S. driving history

In most U.S. states, moving violations, including running red lights and speeding, assess points on a driver's driving record. Since more points indicate an increased risk of future violations, insurance companies periodically review drivers' records, and may raise premiums accordingly. Rating practices, such as debit for a poor driving history, are not dictated by law. Many insurers allow one moving violation every three to five years before increasing premiums. Accidents affect insurance premiums similarly. Depending on the severity of the accident and the number of points assessed, rates can increase by as much as twenty to thirty percent.^[24] Any motoring convictions should be disclosed to insurers, as the driver is assessed by risk from prior experiences while driving on the road.

Marital status

Statistics show that married drivers average fewer accidents than the rest of the population so policy owners who are married often receive lower premiums than single persons.^[25]

Vehicle classification

Two of the most important factors that go into determining the underwriting risk on motorized vehicles are: performance capability and retail cost. The most commonly available providers of auto insurance have underwriting restrictions against vehicles that are either designed to be capable of higher speeds and performance levels, or vehicles that retail above a certain dollar amount. Vehicles that are commonly considered luxury automobiles usually carry more expensive physical damage premiums because they are more expensive to replace. Vehicles that can be classified as high performance autos will carry higher premiums generally because there is greater opportunity for risky driving behavior. Motorcycle insurance may carry lower property-damage premiums because the risk of damage to other vehicles is minimal, yet have higher liability or personal-injury premiums, because motorcycle riders face different physical risks while on the road. Risk classification on automobiles also takes into account the statistical analysis of reported theft, accidents, and mechanical malfunction on every given year, make, and model of auto.

Distance

Some car insurance plans do not differentiate in regard to how much the car is used. There are however low-mileage discounts offered by some insurance providers. Other methods of differentiation would include: over-road distance between the ordinary residence of a subject and their ordinary, daily destinations.

Reasonable distance estimation

Another important factor in determining car-insurance premiums involves the annual mileage put on the vehicle, and for what reason. Driving to and from work every day at a specified distance, especially in urban areas where common traffic routes are known, presents different risks than how a retiree who does not work any longer may use their vehicle. Common practice has been that this information was provided solely by the insured person, but some insurance providers have started to collect regular odometer readings to verify the risk.

Odometer-based systems

Cents Per Mile Now^[26] (1986) advocates classified odometer-mile rates, a type of usage-based insurance. After the company's risk factors have been applied, and the customer has accepted the per-mile rate offered, then customers buy prepaid miles of insurance protection as needed, like buying gallons of gasoline (litres of petrol). Insurance automatically ends when the odometer limit (recorded on the car's insurance ID card) is reached, unless more distance is bought. Customers keep track of miles on their own odometer to know when to buy more. The company does no after-the-fact billing of the customer, and the customer doesn't have to estimate a "future annual mileage" figure for the company to obtain a discount. In the event of a traffic stop, an officer could easily verify that the insurance is current, by comparing the figure on the insurance card to that on the odometer.

Critics point out the possibility of cheating the system by odometer tampering. Although the newer electronic odometers are difficult to roll back, they can still be defeated by disconnecting the odometer wires and reconnecting them later. However, as the Cents Per Mile Now website points out:

As a practical matter, resetting odometers requires equipment plus expertise that makes stealing insurance risky and uneconomical. For example, to steal 20,000 miles [32,200 km] of continuous protection while paying for only the 2000 in the 35000 to 37000 range on the odometer, the resetting would have to be done at least nine times, to keep the odometer reading within the narrow 2,000-mile [3,200 km] covered range. There are also powerful legal deterrents to this way of stealing insurance protection. Odometers have always served as the measuring device for resale value, rental and leasing charges, warranty limits, mechanical breakdown insurance, and cents-per-mile tax deductions or reimbursements for business or government travel. Odometer tampering, detected during claim processing, voids the insurance and, under decades-old state and federal law, is punishable by heavy fines and jail.

Under the cents-per-mile system, rewards for driving less are delivered automatically, without the need for administratively cumbersome and costly GPS technology. Uniform per-mile exposure measurement for the first time provides the basis for statistically valid rate classes. Insurer premium income automatically keeps pace with increases or decreases in driving activity, cutting back on resulting insurer demand for rate increases and preventing today's windfalls to insurers, when decreased driving activity lowers costs but not premiums.

GPS-based system

In 1998, the Progressive Insurance company started a pilot program in Texas, in which drivers received a discount for installing a GPS-based device that tracked their driving behavior and reported the results via cellular phone to the company.^[27] Policyholders were reportedly more upset about having to pay for the expensive device than they were over privacy concerns.^{[citation needed]} The program was discontinued in 2000. In following years many policies (including Progressive) have been trialed and successfully introduced worldwide into what are referred to as Telematic Insurance. Such 'telematic' policies typically are based on black-box insurance technology, such devices derive from stolen vehicle and fleet tracking but are used for insurance purposes. Since 2010 GPS-based and Telematic Insurance systems have become more mainstream in the auto insurance market not just aimed at specialised auto-fleet markets or high value vehicles (with an emphasis on stolen vehicle recovery). Modern GPS-based systems are branded as 'PAYD' Pay As You Drive insurance policies, 'PHYD' Pay How You Drive or since 2012 Smartphone auto insurance policies which utilise smartphones as a GPS sensor, e.g. ^[28]

OBDII-based system

The Progressive Corporation launched Snapshot to give drivers a customized insurance rate based on recording how, how much, and when their car is driven.^[29] Snapshot is currently available in 45 states plus the District of Columbia. Because insurance is regulated at the state level, Snapshot is currently not available in Alaska, California, Hawaii, Indiana and North Carolina. ^[29] Driving data is transmitted to the company using an on-board telematic device. The device connects to a car's OnBoard Diagnostic (OBD-II) port (all petrol automobiles in the USA built after 1996 have an OBD-II.) and transmits speed, time of day and number of miles the car is driven. Cars that are driven less often, in less-risky ways, and at less-risky times of day, can receive large discounts. Progressive has received patents on its methods and systems of implementing usage-based insurance and has licensed these methods and systems to other companies.

Credit ratings

Insurance companies have started using credit ratings of their policyholders to determine risk. Drivers with good credit scores get lower insurance premiums, as it is believed that they are more financially stable, more responsible and have the financial means to better maintain their vehicles. Those with lower credit scores can have their premiums raised or insurance canceled outright.^[30] It has been shown that good drivers with spotty credit records could be charged higher premiums than bad drivers with good credit records.^[31]

Behavior-based insurance

The use of non-intrusive load monitoring to detect drunk driving and other risky behaviors has been proposed.^[32] A US patent application combining this technology with a usage based insurance product to create a new type of behavior based auto insurance product is currently open for public comment on peer to patent.^[33] See Behavior-based safety. Behaviour based Insurance focusing upon driving is often called Telematics or Telematics2.0 in some cases monitoring focus upon behavioural analysis such as smooth driving.

Repair insurance

The examples and perspective in this section deal primarily with the United States and do not represent a worldwide view of the subject. Please improve this article and discuss the issue on the talk page. (September 2012)

Auto repair insurance is an extension of car insurance available in all 50 of the United States that covers the natural wear and tear on a vehicle, independent of damages related to a car accident.

Some drivers opt to buy the insurance as a means of protection against costly breakdowns unrelated to an accident. In contrast to more standard and basic coverages such as comprehensive and collision insurance, auto repair insurance does not cover a vehicle when it is damaged in a collision, during a natural disaster or at the hands of vandals.^{[citation needed]}

For many it is an attractive option for protection after the warranties on their cars expire.

Providers can also offer sub-divisions of auto repair insurance. There is standard repair insurance which covers the wear and tear of vehicles, and naturally occurring breakdowns. Some companies will only offer mechanical breakdown insurance, which only covers repairs necessary when breakable parts need to be fixed or replaced. These parts include transmissions, oil pumps, pistons, timing gears, flywheels, valves, axles and joints.^[34]