Why Is Car Insurance Mandatory?

States not only authorise the use of motor vehicles on public roads but also make roads for them to travel fast and comfortably. Equally, they are responsible for the well-being of their citizens and therefore they require every vehicle owner to buy Liability auto insurance in order to make sure there is a compensation for any potential injuries and damages other road users and property owners may suffer as a result of traffic accidents.

Joint nature of insurance makes it the cheapest solution to solve this social problem. Every vehicle owner is expected to contribute to the premium pool. Then, these monies are used to compensate a few unfortunate citizens. There would be a huge void in the economy without this collective and obligatory system. Still many people cannot afford or purchase insurance and that costs billions of dollars to authorities and other policyholders.

Throughout history, civilizations had various collective efforts to help each other and what we see today is an effective commercial solution to a common problem in terms of Liability auto insurance. Driving on public roads isn’t an automatic right given to anyone after a certain age but it is a privilege for people who comply with the necessary requirements like having a license, vehicle registration and policy.

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.

Besides, drivers are responsible for their actions in the eyes of the law. The easiest way of ensuring that they are accountable for the costs when they cause accidents is to make them buy liability car insurance, which 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 dispute the need that such people must be made whole again as best as possible.

That is why every state in the US has minimum requirements. In some states, depositing a certain amount of money with the authorities, purchasing bonds or providing proof of financial responsibility can discharge you from the requirement. However, arranging liability automobile insurance is almost always easier and cheaper to comply with the laws than alternatives.

Car Insurance 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 the 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. The laws enforce only a minimum level of bodily injury and property damage liability, which pays for third party damages. The rest is still up to you.

Auto insurance also makes it possible to borrow money to buy a car by providing the security that the lender will be compensated if anything happens to the automobile. So, lenders would require a full policy with Liability, Collision, Comprehensive and GAP coverage as part of the loan contract, which is legally enforceable. Therefore, a certain level of vehicle insurance is required to get a car loan and comply with its terms after.