Is Car Insurance Required?

Is car insurance required where you live? There is only one state in the union that doesn’t require some amount of auto insurance. New Hampshire will allow you to provide proof that you could pay out of pocket for damages you may cause in a traffic accident rather than purchasing the state’s minimum car insurance. Remember that you must pay for all damages and medical bills when you are considered at fault for an accident, so traditional auto insurance is typically still a good idea.

What Is Minimum Car Insurance?

If you have a legally registered vehicle and you plan to drive on public roadways, you need to have at least the state’s minimum coverage requirements. If you financed or are leasing your vehicle, the dealership or bank may require you to purchase comprehensive, collision, or GAP insurance. Check with your local Motor Vehicle Department (MVD) to see exactly what you’ll need to drive legally in your state or find the minimum requirements for your location at the state insurance commissioner’s website.

According to The Balance, the most common types of insurance coverage that states include in their minimum auto insurance:

  • Bodily injury liability
  • Property damage liability
  • Personal injury protection
  • Uninsured motorist protection
  • Underinsured motorist protection

    Each state has its own comprehensive requirements. No-fault states usually require higher levels of comprehensive coverage, found The Zebra. At-fault states also require motorists to file an insurance claim after an accident, which results in higher premiums for an at-fault driver. On the other hand, no-fault states often require Personal Injury Protection insurance (PIP) on top of your liability coverages. PIP pays the cost of medical bills for you or your passengers after an accident. The amount of PIP insurance required by each state varies.

    Liability coverages are almost always required because it protects other people and their property, per CoverHound. States believe that at-fault drivers would not be able to compensate others for their losses effectively, and thus the economy and those affected by another driver’s mistakes would suffer.

    Collision insurance covers you when you collide with another vehicle or a static object such as a tree or fence. Collision coverage protects you, the policyholder, and is usually not required.

    Minimum auto insurance can be expressed as three numbers. These represent coverages for bodily injury liability per person, per accident, and property damage per accident in that order. For example, if you had auto insurance read as $20,000/$40,000/$15,000, or 20/40/15, your insurance would be:

    • Bodily injury liability: $20,000 per person and $40,000 per accident
    • Property Damage Liability: $15,000 per accident

      Here are the minimum bodily injury and property liability coverage requirements for each state.

      • Alabama: $25,000/$50,000/$25,000
      • Alaska: $50,000/$100,000/$25,000
      • Arizona: $25,000/$50,000/$15,000
      • Arkansas: $25,000/$50,000/$25,000
      • California: $15,000/$30,000/$5000
      • Colorado: $25,000/$50,000/$15,000
      • Connecticut: $25,000/$50,000/$25,000
      • Delaware: $25,000/$50,000/$10,000
      • Florida: $0/$0/$10,000
      • Georgia: $25,000/$50,000/$25,000
      • Hawaii: $20,000/$40,000/$10,000
      • Idaho: $25,000/$50,000/$15,000
      • Illinois: $25,000/$50,000/$20,000
      • Indiana: $25,000/$50,000/$25,000
      • Iowa: $20,000/$40,000/$15,000
      • Kansas: $25,000/$50,000/$25,000
      • Kentucky: $25,000/$50,000/$25,000
      • Louisiana: $15,000/$30,000/$25,000
      • Maine: $50,000/$100,000/$25,000
      • Maryland: $30,000/$60,000/$15,000
      • Massachusetts: $20,000/$40,000/$5000
      • Michigan: $50,000/$100,000/$10,000
      • Minnesota: $30,000/$60,000/$10,000
      • Mississippi: $25,000/$50,000/$25,000
      • Missouri: $25,000/$50,000/$25,000
      • Montana: $25,000/$50,000/$20,000
      • Nebraska: $25,000/$50,000/$25,000
      • Nevada: $25,000/$50,000/$20,000
      • New Hampshire: $25,000/$50,000/$25,000
      • New Jersey: $15,000/$30,000/$5000
      • New Mexico: $25,000/$50,000/$10,000
      • New York: $25,000/$50,000/$10,000
      • North Carolina: $30,000/$60,000/$25,000
      • North Dakota: $25,000/$50,000/$25,000
      • Ohio: $25,000/$50,000/$25,000
      • Oklahoma: $25,000/$50,000/$25,000
      • Oregon: $25,000/$50,000/$20,000
      • Pennsylvania: $15,000/$30,000/$5000
      • Rhode Island: $25,000/$50,000/$25,000
      • South Carolina: $25,000/$50,000/$25,000
      • South Dakota: $25,000/$50,000/$25,000
      • Tennessee: $25,000/$50,000/$15,000
      • Texas: $30,000/$60,000/$25,000
      • Utah$25,000/$65,000/$15,000
      • Virginia$25,000/$50,000/$20,000
      • Vermont$25,000/$50,000/$10,000
      • Washington: $25,000/$50,000$10,000
      • Washington, D.C.: $25,000/$50,000/$10,000
      • West Virginia: $20,000/$50,000/$25,000, $25,000
      • Wisconsin: $25,000/$50,000/$10,000, $25,000
      • Wyoming: $25,000/$50,000/$20,000

        Keep in mind, many of these states will require more than just bodily injury and property liability. Some of these extra requirements include:

        • Death Liability
        • Medical Payment coverage
        • Personal Injury Protection
        • Uninsured Motorist or Underinsured Motorist Protection

          Contacting your local MVD is the best way to find out about your local car insurance laws.

          Using Proof of Financial Responsibility Instead of Purchasing Car Insurance

          Some states allow drivers to provide proof of financial responsibility rather than getting car insurance. This option typically requires paying a bond that will be used if you are ever in a traffic accident. Some states will allow a cash deposit to be used.

          The driver purchases a bond for an amount set by the state. When in an accident, the bond covers the cost of damage and injury up to the bond limit. The driver must pay anything over the bond limit. If the bonded driver is ever at fault for an accident, they must repay the bond’s cost, including interest. One positive of a bond is that it follows the driver and not the vehicle, meaning the bond buyer is insured when driving any vehicle.

          You might think a bond is a great idea, but the cost of an at-fault accident can often exceed what a normal person can afford. Even in a minor accident with another vehicle, the damage might be only a couple hundred dollars to repair. However, the other person might experience injuries such as whiplash or back pain. In this case, you will be responsible for their medical bills, which could include months of physical therapy and possible legal fees.

          Why Is Car Insurance Required in Most States?

          According to Insurance institutes Information, the reason auto insurance is mandatory is the idea of liability or your responsibility for damages you cause. You may carry comprehensive and collision insurance, but these coverages only cover you and your vehicle. The insurance required by almost every state is to protect other people from damage and injury caused by you. These coverages provide financial relief to the victims of accidents that you are at fault for. Your vehicle has the potential to cause physical damage and harm to others, so your insurance will need to cover these potential costs.

          No matter where you live in the United States, car insurance is a worthwhile investment. Covering the property damage and medical costs resulting from a traffic accident out of pocket could leave you bankrupt. Car insurance quotes are free and easy to access online in every state. Head to your local insurance provider’s website and get covered today!

          Check this out if you need additional information, resources, or guidance on car insurance.

          Sources:

          Is it legal to drive without insurance?

          Why is Car Insurance Mandatory?

          Is car insurance required in the United States?

          Minimum Car Insurance Requirements By State

          These States Do Not Require Auto Insurance

          Car Insurance

          What You Need to Know About Arizona Minimum Car Insurance

          What Is the Cheapest Car Insurance in New Hampshire?

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