Auto Insurance Legal Requirements

Written by Clive Bristol

In all states, auto insurance is required when a driver operates a vehicle. Auto insurance guidelines are mandated by each individual state. For this reason, legal requirements vary from state to state. Understanding the minimal requirements as well as other regulations for your state can help you avoid legal action.

Proof of coverage

In all states, it is required that you carry proof of your insurance coverage with you in your vehicle. If requested by an officer or a court of law, you must have the most up-to-date information available. This proof of coverage is supplied to you by your auto insurance company upon the purchase of your policy. As you renew your policy, you will receive a new insurance card. In some cases, a temporary insurance card is issued until you receive a permanent copy in the mail.

No Fault Coverage

In addition to the minimum state insurance requirements, you may be required to carry no fault coverage, depending on your state. This type of insurance policy requires you to file your insurance claim with your car insurance company if you are involved in an auto accident. The same requirement is placed on any third party involved in the accident as well. No fault insurance mandates are in place to prevent or limit the ability of an individual to file suit against another driver for damages that occur in an accident.

Financial Responsibility

Financial responsibility is proof that you are capable of paying for any damages that may be caused if you are at fault in an accident. This coverage is required in many states. Purchasing adequate insurance is often considered proof of financial responsibility. Failure to carry financial responsibility when required can result in legal penalties. While the penalties vary from state to state, the suspension of your driver’s license is usually included.

Liability Insurance

Liability insurance is the minimum coverage that is mandated by all states. However, the amount that you are required to carry will vary, depending on the state you live in. Liability coverage is designed to cover medical costs or property damage to a third party individual, vehicle, or property when you are considered at fault in an accident. While some states require both bodily injury as well as property liability, some states may only require bodily injury.

The amount of liability insurance you carry will be indicated on your auto policy. It should appear like the example 50/100/25. In this example, the 50, represents how much your insurance company will pay for bodily injury, per person. The second number, 100, indicates how much your insurance company will pay for bodily injury, per accident. The last number, 25, represents the amount that your insurance company will pay for property damage, per accident. Note that each amount is represented in thousands of dollars.

Uninsured and Underinsured Motorist Coverage

Uninsured motorist coverage covers your medical bills in the event that you are in a collision with an uninsured motorist. Underinsured motorist coverage covers your medical bills if you are in a collision with a driver that does not have enough insurance coverage to fully cover your medical expenses. This coverage does not protect your vehicle from damages. It is intended for medical bills only. While some states allow this coverage to be optional, others mandate that all drivers carry uninsured and uninsured motorist coverage. The amount you are required to carry is determined by your state’s minimum legal requirements.

Finding your policy

When searching for your auto insurance policy, it is important that you are aware of all of your options as well as your state’s minimum requirements. If you do not know your state’s minimum requirements, your insurance company will, most often, have the most up-to-date information available.

Insurance agents can be found online, through toll free numbers, or locally. Shopping around will help you to find the best deal. Insurance agents are often helpful when searching for your insurance policy. They know the differences between insurance companies and can often help you to find the best deal.

Failure to carry insurance or allowing a lapse in coverage has other penalties outside of the legal arena. You are often penalized by insurance companies for not having insurance. This applies, even if you were not driving the vehicle while the coverage lapsed. It is important that you carry auto insurance coverage on your vehicle at all times to prevent this costly penalty.

Budget is often a determining factor when selecting an insurance policy. Less coverage usually costs less money when you are paying your monthly premium. However, less coverage also means that you will pay more if you are ever in an accident. Weighing out the costs can help you to make the right determination for your situation. In short, it is best to carry the highest amount of insurance that you can reasonably afford.