Iowa's Mandatory Auto Insurance Law: What You Need To Know

Iowa has a compulsory auto insurance law, requiring drivers to maintain a minimum liability coverage of $20,000 for bodily injury to, or the death of, one person in an accident, $40,000 for two or more people, and $15,000 for property damage. This is often referred to as 20/40/15 coverage. Iowa drivers must always carry proof of insurance in their vehicles, and failure to do so can result in fines or license suspension. While comprehensive or collision coverage is not required by state law, it may be necessary for those leasing or financing their vehicles.

Iowa's motor vehicle financial responsibility law

Iowa, like every other US state, has a motor vehicle financial responsibility law. This means that if you own or drive a car in Iowa, you need proof of your ability to pay for injuries and property damage in the event of a collision. This is typically achieved by purchasing an auto insurance policy.

Iowa operates a fault-based auto insurance system. This means that if you are injured in a collision caused by another driver, you can file an insurance claim or lawsuit against that driver to collect compensation for your injuries. To win your case, you must prove that the other driver was at fault. This usually means demonstrating that the other driver was negligent or careless. If you succeed, your damages can include compensation for emotional distress and pain and suffering.

Iowa's financial responsibility law sets out the minimum amounts of coverage that drivers must have. These are:

• $20,000 for injuries to, or the death of, one person in one accident
• $40,000 for injuries to, or the deaths of, two or more people in one accident
• $15,000 for property damage in one accident

You can prove your ability to pay these damages by filing one of the following with the Iowa Department of Transportation:

• A certificate of insurance
• A surety bond
• A $55,000 certificate of deposit

Most drivers in Iowa choose to buy an auto insurance policy with the minimum coverages required by the financial responsibility law. However, it is important to consider whether these minimum coverages are sufficient for your needs. If you are responsible for a collision that causes moderate or severe injuries, you may find that the minimum liability limits do not provide enough coverage.

Iowa also has penalties in place for drivers who fail to comply with the financial responsibility law. If you are caught driving without auto insurance or other proof of financial responsibility, a police officer can issue a citation, remove your vehicle's license plate and registration, and/or impound your vehicle. There are also fines for driving without insurance, which increase if you cause an accident.

Minimum liability coverage

Iowa's motor vehicle financial responsibility law requires all drivers to have liability insurance. This means that if you own or drive a car in Iowa, you must be able to prove that you can pay for any injuries or property damage you might cause in an accident.

The minimum liability coverage required by law in Iowa is $20,000 of bodily injury to, or death of, one person in one accident; $40,000 of bodily injury or death to two or more people in a single accident, and $15,000 of coverage for property damage. This can be remembered as 20/40/15.

In Iowa, liability insurance covers what the law calls "compensatory damages", or losses attributable to personal injuries and damage to property. This includes lost earnings and benefits, pharmacy charges, amounts paid for replacement household services, and other out-of-pocket costs. It also includes amounts paid to repair or replace damaged property, and loss of consortium. Punitive damages, which are designed to punish a wrongdoer and deter future wrongdoing, are typically excluded from your coverage.

It's important to note that liability insurance does not compensate you for your injuries or property damage. For that, you would need to purchase additional coverage, such as collision coverage or comprehensive coverage. Collision coverage pays for damage to your vehicle if you collide with anything, such as another car or a wall. Comprehensive coverage pays for other types of damage, such as hailstorms, theft, or fire.

While Iowa's minimum liability coverage is enough to be a road-legal driver, it may not provide enough protection in the event of a serious accident. If you are responsible for a collision that causes moderate or severe injuries, you may find that the minimum coverage is insufficient to cover all the damages. In this case, you would be responsible for paying any remaining costs out of pocket. To avoid this, consider purchasing additional liability coverage or exploring other types of optional coverage, such as uninsured/underinsured motorist coverage or rental car reimbursement.

Proof of insurance

Iowa does not legally require drivers to purchase car insurance. However, if you are involved in an accident, you must be able to show proof of financial responsibility. The easiest way to do this is to purchase a car insurance policy.

Post-Accident Requirements

If you are driving or own a vehicle involved in an accident that results in bodily injury, death, or property damage of $1,000 or more, you must file an Accident Report Form with the Iowa Department of Transportation's Customer Services Bureau within 72 hours. You must also prove your financial responsibility or face license suspension.

Proving Financial Responsibility

You can prove your financial responsibility in the following ways:

• Provide proof that you had liability insurance when the accident occurred.
• Obtain a release from every involved party.
• File a statement agreeing to cover the costs to the injured or damaged parties on an instalment plan.
• Get a decision from a civil damage action that excuses you from any liability.
• Complete a warrant for confession of judgment that has an agreement upon payment schedule.
• Submit evidence of a settlement for damages and/or injuries.

Exceptions

You do not have to submit proof of financial responsibility after an accident if:

• Your vehicle was legally standing, stopped, or parked at the time of the accident.
• Someone was driving your vehicle without your permission.
• You were the only person to incur injuries or property damage.

Post-Suspension Requirements

If your Iowa driver's license was suspended or revoked due to an OWI (operating while intoxicated) offense, you must show proof of financial responsibility for any future injuries or damages you might cause. This proof must be valid for two years from the effective date of your suspension or revocation. You can submit this proof through the following methods:

• File an SR-22 form with the DOT's Customer Services Bureau.
• File a Certificate of Automobile Liability.
• File a surety bond or a $55,000 certificate of deposit with the Iowa Department of Transportation.

Iowa Car Insurance Options

Although car insurance is not legally required in Iowa, many people find that it is the best option for proving financial responsibility. An insurance policy will include the basic liability insurance for bodily injury and property damage that you may cause to others in an accident.

Keeping Proof of Insurance in Your Vehicle

When you purchase an Iowa auto insurance policy, the company providing the coverage will send you an insurance card. Keep this card in your vehicle at all times so you are ready to submit it to the appropriate authorities in the event of an accident.

Failure to comply with the financial responsibility law

Iowa has a compulsory auto insurance law, which requires drivers to maintain auto insurance and buy insurance on a vehicle before it can be registered. The minimum liability coverage is $20,000 of bodily injury to, or death of, one person in one accident; $40,000 of bodily injury or death to two or more people in a single accident, and $15,000 of coverage for property damage.

If you fail to comply with the financial responsibility law, there are several penalties you may face. Firstly, a police officer who stops you can issue a citation and remove your vehicle's license plate and registration, or they can take it a step further and also impound your vehicle. The fines for driving without insurance are $325 if you didn't cause an accident, and $645 if you did. You will also have to pay an administrative fee of $15 to the county treasurer to get new license plates if your original plates were removed. If your car was impounded, you will need to pay the towing and storage charges, which could amount to several hundred dollars.

If you cause an accident that results in personal injuries or property damage exceeding $1,500, your driver's license and vehicle registration will be suspended if you cannot post security to cover the estimated damages. This suspension will last for a year unless you are able to post the necessary security. Driving while suspended is a misdemeanor.

In addition to these penalties, you will still need to comply with Iowa's financial responsibility law and obtain the minimum required insurance coverage. As a result, your auto insurance premiums are likely to increase significantly.

Optional coverages

While Iowa's state law only requires drivers to carry liability insurance, there are several other types of optional coverages that drivers can choose to add to their auto insurance policies. These optional coverages provide additional protection and can help drivers avoid large out-of-pocket expenses in the event of an accident or damage to their vehicles. Here are some of the most common optional coverages available in Iowa:

Comprehensive Coverage

Comprehensive coverage helps protect drivers financially in the event of non-collision incidents, such as natural disasters, fire, hail storms, falling objects, vandalism, or theft. It also covers collisions with animals. This type of coverage is often required by lenders for leased or financed vehicles. In Iowa, the comprehensive deductible cannot exceed the collision deductible, and collision coverage is a prerequisite for purchasing comprehensive coverage.

Collision Coverage

Collision coverage is useful in the event of a collision with another vehicle or a stationary object, regardless of fault. It helps pay for repairs or replacement of the insured vehicle. Collision insurance is a form of no-fault coverage, so it applies even if the driver is at fault for the accident.

Uninsured/Underinsured Motorist (UM/UIM) Coverage

UM/UIM coverage is automatically included in new insurance quotes in Iowa, but drivers can choose to reject it in writing. This coverage is essential if you are in an accident with an uninsured or underinsured driver, as it allows you to make claims with your own insurance company. UM coverage protects you if the at-fault driver doesn't have liability insurance, while UIM coverage applies when the at-fault driver's insurance is insufficient to cover your expenses.

Gap Coverage

Gap coverage, also known as loan/lease coverage, is designed to protect drivers from the rapid depreciation of new vehicles. It covers the difference between the actual cash value of the car and the remaining balance on the loan, ensuring that drivers are not left "upside down" on their loan in the event of an accident.

Medical Payments Coverage

Often referred to as "med pay," this coverage helps pay for medical bills or funeral expenses for the insured driver and their passengers, regardless of who is at fault in the accident. The coverage limits typically range from $5,000 to $10,000.

Rental Car Reimbursement

If your vehicle is in the shop due to a covered loss, rental car reimbursement can help cover the cost of a rental vehicle up to a certain limit, usually around $40 per day or $1,200 total. This coverage is typically available only when comprehensive and collision coverages are also included in the policy.

Roadside Assistance

Roadside assistance provides 24-hour emergency services such as towing, fuel delivery, flat tire assistance, locksmith services, and mechanical or electrical failure assistance. This coverage can be a valuable addition to any driver's policy, offering peace of mind in case of unexpected breakdowns or vehicle issues.

Frequently asked questions