Why Is Car Insurance Mandatory?

Driving on public roads and streets isn’t an automatic right given to anyone after certain age but it is a privilege for people who comply with the necessary requirements like having a license, vehicle registration and policy. When this point is accepted it is easier to answer the question of why is auto insurance mandatory? This post will look at the options available and their provisions to help make an informed decision.

It is state authorities’ responsibility to make sure citizens are sufficiently protected from harm. Every state must ensure that other road users, pedestrians and anyone else must be covered against injuries and damages caused by a car accident. The least people can expect is to have some sort of monetary compensation should they end up in such a situation and it is lawmakers’ responsibility to ensure it.

The easiest way of ensuring that drivers have financial provisions to meet the costs of injuries and damages they may cause to third parties due to traffic accidents is to make them buy vehicle insurance. Actually, getting sufficient liability coverage is the easiest way of doing the right thing in order to at least compensate innocent people financially after causing them harm. No decent individual would argue that such people must be taken care of.  

That is why every state in the US has minimum requirements. In some, depositing certain amount of money with the authorities, purchasing bonds or providing proof of financial responsibility can discharge you from the requirement. However, 9/10 it is easier and cheaper to arrange liability policy to comply with the laws than alternatives.

What makes the insurance the cheapest solution that pays for damages and injuries suffered by innocent bystanders and other motorists is its joint nature. Every vehicle owner is expected to contribute to the premium pool. Then, these moneys are used to compensate a few unfortunate citizens. There would be a huge void in the economy without this collective and obligatory system. All throughout history, civilizations had various collective efforts to help each other and what we see today is a more commercial version of it.

When Did Car Insurance Become Mandatory?

It was first imposed by the laws of Connecticut in 1925 and Massachusetts in 1927. Although they were in basic form, these states were the first to require liability cover to compensate injuries, deaths and property damages resulting from a vehicle accident. By 1970s, the rules we know today were enforced throughout the U.S. and most other countries have similar laws. From then onwards, it has always been accepted to be the most effective form of the said provision throughout the country. Also, it is a simple solution to protect licenses against suspension due to driving without a policy in most states.

Although it isn’t the subject of this post it may be helpful to answer why automobile insurance is enforced but not health or life. It is simple because the latter is for your own and family’s health benefit. Remember that laws enforce only minimum third party provisions and this is the part that pays for other people’s damages. The rest is still up to you.

What Is Voluntary and Mandatory Vehicle Insurance?

Sometimes, the minimum requirements can lead to misconceptions. Some motorists may take them as all they need to worry about in terms of protecting their automobiles. So, it is best to define them for the purpose of clarity. If you are only interested in being legal and want the cheapest you can get you would stick with the latter. If you are concerned with protecting own automobile properly as well you would need to look into former and both are explained below further.

Mandatory Car Insurance

First of all, each state determines the level of liability coverage that must be purchased to drive a vehicle legally. Otherwise, there are serious consequences. They are not interested to know if you have Collision and Comprehensive coverage for your automobile or not. But they have to make sure that anyone who drives a vehicle has third party provision to pay for others’ property damages and injuries.

Voluntary Auto Insurance

Any other coverage you buy on top of the minimum enforced is voluntary and it is up to each individual to figure out how much protection is needed. For example, it is up to you to have Collision and Comprehensive for own automobile so that you are compensated up to its open market value should you suffer crashes, theft, vandalism, flood or other weather related losses. It may be optional but it is highly recommended and most motorists buy full coverage, which we can help you get cheaply right here through our panel of companies.

Even though it may be voluntary most people would not be comfortable without protecting their investments on cars and other assets sufficiently. If you don’t have high enough liability limits you will have to pay for the damages and injuries you caused to others out of pocket. They won’t just go away because you run out of it. Instead they will sue you for whatever you have got. It is a serious matter and you should consult a broker if you are not clear about any aspects of it. Not knowing is never a good excuse. You have got to learn and make a decision on this important issue.

Even further many people want monetary protection from Uninsured Motorists. It may sound like it is something for each driver to be concerned. However, it becomes your problem if they cause you harm because people who offer no compensation to third parties probably have no means of paying the premiums and your damages.

Luckily there is a solution that can protect you against such people and that is called Uninsured Motorist Coverage, which may already be included in a compulsory policy depending on the state you live. Otherwise, you can add it. This is something you need to check to make sure you don’t miss out on this valuable provision.

Hopefully, it is clear how a policy can help you to deal with many unknowns relating to owning and operating motor vehicles. You may be worried about costs of premiums but it is much harder to handle a large loss on your own.