Specific Types of Auto Liability Insurance Required in Different US States

Posted By Karen on Mar 11, 2016 | 0 comments


In the US, there are about four instances when a driver needs to show proof of financial responsibility: when they get pulled over by a traffic enforcer, if they get involved in an accident, when they renew their car registration, and when they renew their driver’s license.

Financial responsibility is the law that requires individuals (in all 50 states) to prove that they are capable of paying for damages in case of an accident that is due to their fault. Proving financial responsibility may be done by carrying auto liability insurance, posting a bond or depositing cash with the state, or by paying the state’s Department of Motor Vehicles (DMV) the required uninsured motor vehicle fee, in lieu of insurance.

Carrying auto liability insurance is the most common way of demonstrating proof of financial responsibility. In fact, it is mandated on all drivers in 48 US states. In 38 of these states, the type of insurance coverage recognized is the tort system, wherein victims of accidents have the option to file a civil lawsuit against the at-fault driver and wherein compensation is paid to the victim by the insurance provider of this at-fault driver.

Nine states, on the other hand, require drivers to purchase the “no-fault” insurance coverage. This insurance coverage no longer requires the filing of any lawsuit since payment for losses (cost of medical treatment, lost wages, etc.) is made by each driver’s insurance provider. In the remaining three “choice states,” Pennsylvania, New Jersey and Kentucky, the ‘no-fault” system is, likewise, recognized; however, drivers are also free to rather purchase the tort insurance coverage. The 12 states where the “no-fault” auto insurance coverage is required are Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New York, North Dakota, and Utah.

(The state of New Hampshire does not mandate the carrying of auto liability insurance, while the state of Virginia allows drivers to register their cars as uninsured if they pay the uninsured motor vehicle fee to their state’s Department of Motor Vehicle. If drivers, in both states, rather choose to purchase auto insurance, however, then the policy they will need to have is the tort coverage).

More than 29 million drivers, according to the Insurance Research Council (IRC), continue to drive on US roads and highways without insurance, though, because so many drivers find car insurance policies an added burden to their budget. According to the website of Habush Habush & Rottier S.C.®, not carrying auto liability insurance can be more costly for driver as they can face suspension of their driving privileges and much more expensive financial obligations in case they get involved in an accident. To find the best insurance deal that will fall within their respective budget, drivers can ask for free auto insurance quotes from an independent car insurance company.

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