Financial Responsibility Laws for Motor Vehicles

No matter how good a driver you are there is a chance that you could cause an accident in which people gets injured or suffer property damages. In the light of this possibility, every state wants to make sure that motor vehicle owners make some sort of provision to provide for such damages. The easiest way of complying with such requirements is to buy car insurance liability coverage.

It is up to your state to make sure that motor vehicle operations are regulated. That is why you need to register any vehicle you buy with your local DMV. You need to get a driving license if you want to drive cars. And you need to show that you can pay for the damages you could cause to other citizens with your motor vehicle.

You need to purchase at least minimum liability car insurance to comply with most state auto insurance financial responsibility laws. They will not register an uninsured vehicle. Also local DMV keeps track of cars without insurance and penalizes the owners, unless they confirm that the vehicle is off the road.

Not all states require car insurance as proof of financial responsibility. Three states may accept bond purchase, cash deposit or proof of asset allocation to cover for possible liabilities. Virginia allows a fee payment for an uninsured vehicle for one year only. New Hampshire and Mississippi allows posting bonds instead of insurance. All the other 47 states and District of Colombia insist on insurance.

Self-insurance may be an option in a large-scale operation. For example, a large company with many vehicles may find it cheaper or more practical to self-insure all their vehicles and go through with proving financial responsibility to their state.

In general, auto insurance is the easiest way to comply with state requirements. If you ever cause any injuries and damages, your insurer not only covers the claims against you (up to the limit of your coverage) but also defends you. Probably it would cost you a lot more to deal with a claim against you if you were to choose another method to comply with your state’s responsibility requirements, other than insuring your automobile.

Again, every state has their own rules and you can find out more by choosing your state from the list. Every policy sold in your state would automatically include the minimum liability coverage required. Then, it is up to you to add more options like comprehensive and collision, recovery and accident forgiveness.

You should also consider the benefits of buying auto insurance. It is not just about complying with the rules but also making sure that you are well protected for every eventuality. A decent coverage that includes comprehensive and collision not only pays for claims against you but also cover your own losses. Considering you may only need to pay few hundred dollars more for full coverage it makes sense to do a good job when it comes to insuring automobiles.

Also, every state has different penalties for drivers with no insurance. Depending on your state, your car may be impounded and license plates taken, your driving license may be suspended and you pay hefty fines. Again, check your state rules if you want to learn more. Penalties are usually harsher for uninsured drivers who are discovered after an accident.

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