Mandatory Auto Insurance Laws

Since the prospect of mandatory health insurance is such a hot topic, it made me think about similar rules we have in place to require drivers to purchase car insurance.

Every US state has a law which requires us to prove we are financially responsible in order to be a legal driver. For the vast majority of people, this simply means we have to purchase a minimum liability insurance policy. Of course, many of us carry more coverage than this because of our lender's requirements, business vehicles, or simply because we are careful.

In my state, we can get in big trouble if we do not have an insurance card to present at an accident. But my state, and many others, take it further than this. We also have to present proof of insurance when we renew our driver's license, get our car inspected, or get new tags. This makes sense, in a way, because it is really to late to change anything after we have already had an accident.

Who Do Mandatory Car Insurance Laws Protect?

We Americans are usually pretty tolerant of others. In general, we do not care if people act imprudently, or at least we don't enact laws about it, unless those actions could hurt other people. But since each state decided to enact mandatory auto insurance policies, the lack of coverage must have been judged to cross that line.

Consider the type of drivers who do not carry insurance. In general, they are not rich people who can just write a check in case they have accident damage claimed against them. Most of the time, they have financial challenges so they cannot afford to pay premiums, much less cover the cost of an accident. If a person cannot afford to pay minimum liability insurance premiums, it might be fair to say they are not financially responsible enough to own a car. This is not a judgement on my part, but just the conclusion that the lawmakers in every US state have arrived at.

Liability Insurance Covers The Other Guy

So what we need to understand is that a minimum liability policy is not purchased to protect the insured driver or the vehicle. It is purchased to protect another person who claims damage because of an accident. If you are judged to be at fault in an accident, you will be liable for the other person's claims. Your liability insurance pays him (or her).

Liability insurance does protect you in a way. It means that an insurer has agreed to support you and pay claims in case you cause an accident. They will also be there to help you make a case in case you dispute your liability. Insurers love to do this because they do not want to pay claims unless they have to. And of course, liability insurance keeps you out of trouble because you can demonstrate that you meant the state required minimums.

Do You Need Auto Insurance?

If you need a new car insurance policy, want to compare quotes to see if you have the best deal, or just need to see how much it would cost to insure another driver or different car, it is pretty easy to find the required minimum policy that will protect you. Keep in mind, that your own personal needs, judgement or a lender, may require you to buy more than the minimum.

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