Auto Insurance: Mandatory In All States?

Auto insurance laws vary from state to state in the US, with 49 out of 50 states mandating some form of auto insurance or proof of financial responsibility. While car insurance is not mandatory in New Hampshire and Virginia, drivers in these states are still liable for any damages they cause in an accident. Other states may require drivers to have liability insurance, no-fault insurance, or uninsured motorist coverage.

New Hampshire and Virginia are the only two states that do not require auto insurance

While almost every state in the US requires drivers to have auto insurance, New Hampshire and Virginia are notable exceptions. These two states do not mandate auto insurance, but they still have guidelines in place to prevent irresponsible driving behaviours.

In Virginia, drivers are required to prove that their vehicle is insured to obtain license plates. However, they can opt out of insurance by paying an annual $500 uninsured motor vehicle fee, allowing them to drive without coverage. This fee does not provide any accident coverage, and uninsured drivers are still liable for any damages caused. Uninsured drivers who do not pay the fee will have their driving privileges suspended.

New Hampshire also does not mandate auto insurance, but it requires proof of financial responsibility. This means that drivers must demonstrate they can pay for any damages or injuries incurred by another driver if found at fault in an accident. If a driver cannot provide this proof, they are required to purchase auto insurance.

While it may be tempting to go without auto insurance in these states, it is essential to understand the risks involved. Driving without insurance can lead to serious financial consequences, and you could be taken to court or have your driving privileges revoked if found at fault in an accident.

If you choose to buy insurance, you should know that the states' minimum insurance requirements differ

If you're buying auto insurance, it's important to know that the minimum insurance requirements differ from state to state. While almost all states require a minimum amount of liability insurance, the specific coverage limits vary. Here are some common types of coverage and how they may differ across states:

• Bodily Injury Liability: This coverage pays for any injuries you cause to another driver or their passengers in an accident. The coverage limits are typically expressed as a series of numbers, such as 15/30/10, where the first number indicates the maximum payout per person, the second number is the maximum payout per accident, and the third number is the limit for property damage. For example, in Massachusetts, the minimums are $20,000 per person and $40,000 per accident for bodily injury liability.
• Property Damage Liability: This coverage pays for any damage you cause to another person's property, such as their vehicle or other structures, in an accident. The limits for property damage liability can also vary by state. For instance, in Massachusetts, the minimum required coverage is $5,000 per accident.
• Uninsured/Underinsured Motorist Coverage: This type of coverage helps pay for injuries to you and your passengers if you're hit by a driver with little or no insurance. About half of the states require this coverage, and some may mandate it only for bodily injury. In Massachusetts, the minimum coverage limits are $20,000 per person and $40,000 per accident for uninsured motorist bodily injury.
• Personal Injury Protection (PIP): PIP is mandatory in no-fault states, where each party is responsible for their own damages in an accident. It covers medical expenses, rehabilitation, lost wages, and funeral expenses for the insured driver and their passengers, regardless of fault. Some at-fault states also require PIP coverage. In Massachusetts, the minimum PIP coverage is $8,000 per person and $8,000 per accident.
• Medical Payments Coverage: This coverage is similar to PIP but does not include lost wages or additional benefits. It is only required in Maine but can be useful for those with high health insurance deductibles.

It's important to note that while some states may have lower minimum requirements, it is generally recommended to carry more than the bare minimum insurance coverage. This will provide better financial protection in the event of a serious accident or lawsuit.

Every state requires that you meet financial responsibility requirements through insurance, a bond, or another approved means

While auto insurance requirements vary from state to state, every state in the US requires that you meet financial responsibility requirements. This can be done through insurance, a bond, or another approved means. This is to ensure that you are able to pay if you cause damage to another person or their property in a car accident.

In most states, auto insurance is mandatory and you are required by law to have it. However, there are a couple of exceptions. New Hampshire and Virginia are the only two states that do not require drivers to have auto insurance. Even in these states, however, drivers are still held responsible for any property damage or bodily harm they cause in a car accident. In New Hampshire, drivers must demonstrate that they have the financial resources to cover damages up to $50,000 for liability and $25,000 for property damage. In Virginia, drivers can pay an uninsured motor vehicle fee of $500 to the DMV to drive without insurance, but they are still financially liable for any damages caused in an accident.

Even if auto insurance is not mandatory in your state, it is still a sound investment. Auto insurance provides financial relief for victims of car accidents and protects you in case of any unexpected costs. Additionally, if you lease or finance your vehicle, the dealership or bank may require you to carry comprehensive and collision coverage with low deductibles and gap insurance to protect their investment.

To legally register and drive your vehicle, it is important to understand the specific auto insurance requirements of your state. These requirements can include bodily injury liability coverage, property damage liability coverage, personal injury protection, and uninsured/underinsured motorist coverage. By meeting these requirements, you can ensure that you are fulfilling your financial responsibility in the event of a car accident.

Most states require liability coverage for bodily injury and property damage

While not all US states require drivers to have car insurance, most mandate liability coverage for bodily injury and property damage. This means that if you are found to be at fault in a car accident, your insurance will cover the other driver's medical costs and lost wages, as well as any damage to their vehicle or other property.

Bodily injury liability coverage is necessary for many reasons. It can also cover legal expenses if the injured party sues you, provided your policy includes enough liability coverage. This type of insurance will not, however, pay for any repairs or property damage, whether to your own or someone else's vehicle, or your own medical expenses.

The amount of bodily injury liability coverage that you need depends on your state's requirements. You should, at minimum, have enough to meet these requirements. However, it is recommended that you purchase coverage that matches or exceeds your total net worth, to protect your assets in the case of a severe accident. Some experts recommend having bodily injury limits of at least $100,000 per person and $300,000 per accident.

The cost of bodily injury liability insurance varies depending on factors such as how much coverage you purchase, your state, and your driving history. If you have had a recent accident or moving violation, your coverage will likely be more expensive.

No-fault states require higher levels of coverage, including Personal Injury Protection (PIP)

No-fault laws require drivers to carry personal injury protection (PIP) insurance to cover their medical costs and lost wages after a car accident, regardless of who caused the crash. This is different from liability insurance, which covers the expenses of third parties (i.e., the other driver and their passengers) if the policyholder is at fault.

In no-fault states, drivers are still required to carry bodily injury liability coverage to pay for injuries that exceed the state's threshold for bodily injury lawsuits. This means that if you are in an accident and your injuries are severe or costly enough, you can sue the at-fault driver to cover your expenses.

The benefits of PIP insurance include:

• Medical expenses for both the policyholder and their passengers, even if they don't have health insurance.
• Lost wages if you or your passengers are injured and can't work.
• Rehabilitation costs.
• Replacement services for tasks you can't perform due to your injuries, such as childcare or house cleaning.
• Funeral expenses and survivor benefits.

Some no-fault states that require PIP insurance include:

• Massachusetts
• New Jersey
• Pennsylvania
• Michigan
• Florida
• Hawaii
• Oregon
• Minnesota
• New York
• North Dakota
• Kentucky
• Maryland
• Delaware
• Utah

The minimum and maximum coverage limits for PIP insurance vary by state. While PIP is required in some states, it is optional or not offered at all in others.

Frequently asked questions