How State Insurance Requirements Vary
Every state in the U.S. has mandatory auto insurance laws of some kind, but the nature of these laws can vary widely from state to state. Most states require drivers to carry liability coverage, but the amount of coverage that drivers must carry to comply with the law differs by state. Similarly, certain states require drivers to carry more than just liability protection in order to drive legally. The penalties for failing to comply with mandatory car insurance laws also tend to vary considerably by state. In this post, we’ll discuss the variations in car insurance requirements by state and explain what it means for you.
Liability Coverage
Most states require drivers to purchase an auto liability insurance policy with mandatory amounts of coverage. Depending on the state, the driver must present proof of this policy at the time the vehicle is registered, when a driver’s license is obtained, and/or when the driver is stopped by a law enforcement officer. States express their mandatory liability minimums with three numbers. For example, Alaska has mandatory liability minimums of 50/100/25. This means that drivers must carry $50,000 of bodily injury liability for a single person injured in a collision, $100,000 of bodily injury liability for two or more people injured in a collision, and $25,000 of property damage liability for a single accident. These liability minimums can vary widely by state. For instance, while Alaska has very high minimums, Arizona’s minimums are only 15/30/10.
Financial Responsibility
Not all states require drivers to purchase a motorist liability insurance policy in order to drive legally. Some states give drivers the option to prove financial responsibility instead. Proof of financial responsibility indicates that the driver is capable of paying for a certain amount of damages for which he or she is liable. In some states, drivers can demonstrate financial responsibility by filing a large bond with the treasurer and obtaining a certificate from the motor vehicles department. Individuals with multiple vehicles also may have the option of presenting a self-insurance certificate to the motor vehicles department.
Additional Coverages
Certain states require drivers to carry additional coverages on top of basic liability protection. Personal injury protection (PIP), or medical payments coverage, is one such coverage. This coverage pays for the injuries you and your passengers sustain regardless of fault. The states that require PIP often do so in order to cut down on auto accident injury lawsuits. Moreover, some states require drivers to carry certain amounts of uninsured/underinsured motorist coverage. Uninsured motorist coverage will pay for your and your passengers’ medical expenses in the event you are in an accident with an uninsured driver. Your state may also allow uninsured motorist coverage to pay for property damage caused by an uninsured or underinsured driver.