A usual question vehicle owners ask is why is car insurance required. Car insurance imparts financial protection to people who have been a part of accidents that did not result because of their fault. In the United States, 48 out of 50 states need you to have it. Otherwise, you cannot legally drive. Car insurance shows your monetary responsibility for liability if an accident occurs.
If you don’t have it, the government will inflict legal penalties on you, such as suspending your license and car registration. You may even be financially drained if you do not possess this crucial proof of assets.
Reasons for Having a Car Insurance
Accidents can happen anytime. So, it is critical for the driver to have car insurance. It allows them to pay for property and physical damages to themselves and others.
If not full insurance, it is mandatory to have liability insurance. This safeguards others in the event of damage caused by another driver. Go through these reasons to understand why car insurance is required.
- Every US state has minimum levels of auto liability coverage. This level or limit is the highest that your insurance agency will pay for a claim that it covers. But it’s not enough, and you can pay out of your pocket if the damage is big. So, it’s necessary to have more coverage in your insurance policy.
- It is likely for you to be held responsible for expenses related to the accident. Without liability coverage, you’ll have to cover these expenses from your own pocket.
- Are you leasing or financing your motor vehicle? You may need to buy comprehensive and collision coverage. The lender needs you to have this, as it safeguards their investment while you are making your monthly payments. These coverages also cover the cost of replacing or repairing the vehicle in case of damage.
- Collision and comprehensive coverages are also important if you have your own vehicle. Comprehensive coverage covers the damages caused when your car is damaged by something that isn’t a collision or is stolen.
- Car insurance also helps safeguard your passengers. Personal injury protection and that for medical payment will help you pay your healthcare expenses if you are injured. It also covers the expenses of your passengers in case of an accident.
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Is it Illegal to Not Possess Car Insurance in the US?
Yes. It is completely illegal to do so. You cannot drive without car insurance in most US states. You will face penalties, and fines, and lose your driving privileges without insurance coverage. In some instances, drivers without coverage can even be jailed.
When you finance your car, the lender also requires comprehensive collision coverage. These are part of a loan agreement so the lender can protect their financial asset, the vehicle.
Generally, at least $100,000 of physical injury protection for every person and $300,000 per accident is there. It is recommended by the insurance industry and consumer groups.
What Is the Expected Cost of a Car Insurance?
Car insurance’s cost differs in different states. Many other factors also affect the cost. Presently, $2,014 is the national average rate of car insurance. $614 yearly is the average price of minimum coverage. Your state may need varying levels than another state for physical injury liability or property damage liability.
Here are the leading factors that influence the price of insurance for drivers.
- Factors like crime levels, weather events, and the cost of vehicle repair decide a basic cost for the local zip code. The carriers use this in their pricing structure. Currently, New York and Florida have the highest average yearly rates for full coverage insurance. The least is in Vermont, which is $1,06,1.
- Age, gender, credit score, marital status, and previous insurance are some other factors that influence the cost. Apart from this, the miles you drive, your vehicle’s model, the type of your coverage, and its limits also determine the cost.
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State-Level Requirements of Car Insurance Amount
Almost every state needs car insurance. However, the amount differs from one state to another. The insurance requirements amount is written in the format 25/50/15. Here’s how to understand it.
- The first number, 25, is the $25,000 limit of physical injury liability for one individual.
- The second number, 50, is the $50,000 limit of physical injury liability for one accident.
- The third number, 15, is a $15,000 limit of damage to property in a single accident.
Here are state-wise minimum liability coverage requirements:
Alabama 25/50/25
California 15/30/5
Arkansas 25/50/25
Arizona 25/50/15
District of Columbia 25/50/10
Alaska 50/100/25
Connecticut 25/50/25
Hawaii 20/40/10
Delaware 25/50/10
Colorado 25/50/15
Florida $10,000 (in property damage liability)
Georgia 25/50/25
Illinois 25/50/20
Idaho 25/50/15
Indiana 25/50/25
Iowa 20/40/15
Louisiana 15/30/25
Kansas 25/50/25
Kentucky 25/50/25
Maine 50/100/25
Maryland 30/60/15
Massachusetts 20/40/5
Missouri 25/50/25
Michigan 20/40/10
Mississippi 25/50/25
Montana 25/50/20
Minnesota 30/60/10
Nebraska 25/50/25
Nevada 25/50/20
New Hampshire 25/50/25*
New Jersey 15/30/5
New Mexico 25/50/10
South Carolina 25/50/25
Oklahoma 25/50/25
New York 25/50/10
North Dakota 25/50/25
Ohio 25/50/25
Oregon 25/50/20
North Carolina 30/60/25
Pennsylvania 15/30/5
Rhode Island 25/50/25
Vermont 25/50/10
South Dakota 25/50/25
Tennessee 25/50/25
Texas 30/60/25
Utah 25/65/15
Frequently Asked Questions?
Why is car insurance compulsory?
In a majority of states, you should have the minimum car insurance amount to drive your car on the road. Insurance laws of the vehicle safeguard drivers in cases of accidents or mishaps. If you have caused an accident, you can pay for the physical or property loss through your liability coverage.
Do I need to have vehicle insurance if I am not a car owner?
If you do not own a car and don’t drive another person’s car you don’t require auto insurance. However, if any person in your family has a car and you drive it often, tell them to add you to their vehicle insurance policy.
Is car insurance mandatory in Tennesee?
You need to have a car liability insurance policy to pay for your expenses in case of an automobile accident in Tennessee. The Financial Responsibility Law of the state requires you to have an insurance policy to be financially responsible in an accident case.
