Motor Vehicle Insurance Rules
- Nearly all states require drivers to carry auto insurance.driving 4 image by Andrzej Borowicz from Fotolia.com
Motor vehicle insurance policies are designed to financially protect you in case of an auto collision. Policies are typically defined as either full-coverage (covers injuries and damages to every person and vehicle involved) or liability (covers only injuries and damages to other people or vehicles involved, besides the insured person). Auto insurance rules and requirements vary from state to state. However, nearly all states require drivers to carry some form of motor vehicle insurance.
- As of 2010, every U.S. state, except New Hampshire, has a law requiring drivers to obtain some sort of auto insurance. And, in New Hampshire, you can only drive without insurance if you can prove that you own enough assets to cover the cost of a collision. Most states require drivers to carry official proof-of-insurance documents in their vehicles at all times.
Type of Coverage
- In the majority of states, a driver must carry a minimum of liability insurance. However, some states require special no-fault auto insurance, similar to full-coverage. In these states, if a collision occurs, there is no investigation into who is at fault; each person's insurance company pays for the injuries and damages to that person and his vehicle. This way, you receive coverage, even in an accident with an uninsured motorist.
- The minimum amount of vehicle insurance a person must carry also depends on his resident state. However, each state defines those amounts, using the same triple number system, a/b/c, where 'a' is the maximum amount your insurance covers for injuries to one person, 'b' is the maximum total amount of injury coverage to all persons and 'c' is the amount of property damage coverage. Some states require relatively little coverage---California and New Jersey both require a minimum of $15,000/$30,000/$5,000 insurance coverage---while others require quite a lot---Maine and Alaska require a minimum of $50,000/$100,000/$25,000. Most states require much higher coverage for bodily injury than property damage.
- There are a few auto insurance policy add-ons commonly required by various state laws. Required by 21 states, the most common add-on is uninsured motorist coverage, which, as it sounds, covers your damages in the case of a collision with an uninsured motorist. Another common add-on, required in 16 states, is personal injury protection (PIP), which covers your own injuries, regardless of fault.
- Excluding New Hampshire, if you drive without auto insurance, you can face both criminal and civil penalties. The criminal penalties for getting caught driving an uninsured vehicle range from small fines to driver's license suspensions. However, most states impose reduced penalties, sometimes only formal warnings, for first-time offenders. If you get in a car accident, and you don't have auto insurance, you can also face hefty civil penalties, most likely a lawsuit to pay for injuries and damages.