When unsuspecting, innocent bystanders, road users and property owners stand to lose because of the act of someone else driving a vehicle, states had to step in and make it compulsory for every vehicle owner to purchase at least liability insurance, which compensates third parties for injuries and damages suffered as a result of an accident involving the insured car. Not only are most motorists happy to comply with these rules but also they buy sufficient coverage to compensate for people they may cause losses and to protect their own investments on cars.
By law, every state in the USA requires an automobile owner to purchase at least a minimum clearly publicized level of liability car insurance coverage or provide similar provisions. The laws also clearly state the penalties for driving uninsured and they have checks and enforcement actions in place to monitor the take up.
Usually, Departments of Motor Vehicles (DMV) are tasked with checking and ensuring that every registered automobile in the state either has the required insurance or has been taken off the road. Most of them require auto insurers to report back to them when a liability policy lapses and they start chasing the owner immediately for an explanation.
Today, nearly all states can electronically match a vehicle registration with an insurance policy or confirm that there isn’t one in place. Then, they can proceed with the appropriate enforcement action, which could be a large fine or even impoundment of the vehicle, which can be released once the owner confirms compliance with the laws.
Motorists are required to carry proof of insurance and provide details of their policies and providers in case of accidents to other drivers and people involved. Most people carry electronic proofs these days and most states accept proofs provided with cellphones and other digital means.
Except special circumstances like coverage for a stored automobile, every vehicle insurance policy sold in the US must have at least the minimum Liability coverage required in the state it is sold. So, people don’t need to worry about buying anything less than legally required. Having such coverage allows motorists to comply with the laws while delivering much needed financial support to third parties who are injured or suffered monetary loss.
Setting the lowest compulsory auto insurance liability protection offered to third parties is a balancing act. It is important that authorities come up with a certain level of provision to protect citizens who might be a victim of a traffic accident. On the other hand, if the premiums are too high due to high liability limits, people cannot afford them and go without it no matter how tough the penalties are.
Unfortunately, approximately 14% of US motorists are uninsured despite all the laws and enforcement efforts. This figure is scarily high in some neighborhoods. People either cannot afford to pay the premiums even for a basic policy or don’t want to pay high rates because of traffic tickets or bad accident history.
It may sound like it should be fairly cheap but minimum state required coverage isn’t really cheap for people with no driving and insurance history like migrant workers, young drivers and people with bad driving history or credit. Providers aren’t keen to compete on this segment of the market that increases the prices even further.
Uninsured motorists cost the states money due to unpaid damages to roads and efforts to police the situation. And the other motorists have to pay more to compensate for the losses providers suffer. That is why there are various schemes in place in many states to increase the number of people who contribute to insurance pools. Often states try to find solutions to help low-income motorists and migrant workers like low-cost vehicle insurance programs, which allow people to buy coverage less than the minimum required in order to make the policies affordable for people under a certain income threshold.
It is compulsory to insure cars as long as you own and drive them. Some people may get one quote and give up looking for coverage when it is too expensive. They should know that they may be able to find an affordable provider if they persist in shopping around. Then, they don’t need to try hard to escape getting caught uninsured and can drive comfortably.