In addition to a driver's license, most states require drivers to carry another card: proof of insurance. While almost all states require drivers to have insurance coverage, the specifics of the requirements—including the types of insurance and levels of coverage—vary by state.
This article outlines the basics of car insurance laws and what could happen if you're caught driving without insurance.
States have laws requiring car insurance to cover property damage, injuries, and deaths that can result from collisions. By requiring all drivers to be ensured, states can guard against the possibility that someone who is injured or whose property is damaged in an auto accident won't be compensated.
After a vehicle collision, the police and insurance companies investigate to determine who was liable (at fault) and the amount of damages. The insurance companies of the parties involved in the accident sometimes dispute fault and the dollar amounts related to property damages, injuries, and the like.
However, once all this is hashed out, the insurance companies for the at-fault parties are generally on the hook for paying for injuries and damages the driver caused. In other words, the insurance company or companies will pay the necessary damages to the injured party to cover expenses like vehicle repairs and hospital bills.
If the at-fault driver doesn't have sufficient insurance to cover the damages (whether for injuries or property damage), the injured party can typically sue the at-fault driver for the amounts that aren't paid by the insurance company.
Each state that requires auto insurance has its own minimum coverage requirements. But there are generally four types of required coverage:
Many states just have minimum coverage requirements for bodily injury and property damages. However, the insurance laws of some states require drivers to have three or all four types of coverage.
Most states require motorists to carry minimum insurance coverage for personal injuries (which also includes deaths). In the majority of states, there are actually two separate requirements here:
For example, some states require a minimum in coverage of $25,000 per person injured and $50,000 per accident. Some states break it down even further and have specific minimum coverage amounts for things like medical bills, funeral costs, and lost wages.
Most states require drivers to hold at least $20,000 in property damage insurance coverage. Property damages insurance covers things like the cost to repair or replace damaged vehicles but also covers things like the cost of replacing of a mailbox or fence that was hit by a driver.
Uninsured and underinsured coverage helps protect policyholders from at-fault drivers who don't have (or don't have enough) automobile insurance. This type of coverage can also come into play when damages or injuries are caused by a hit-and-run driver.
If you are struck by an uninsured or underinsured driver (or the driver flees) and receive physical injury or property damage, this type of coverage requires your own insurance company to cover the costs. The insurance company will often attempt to collect from the at-fault driver, but the policyholder will be able to cover medical and repair costs without having to deal with the stress of trying to collect from the other driver.
Nearly 20 states currently require all drivers to maintain an uninsured and underinsured coverage policy.
Personal Injury Protection (PIP) covers the medical costs of the policyholder. PIP covers these costs regardless of the policy holder's fault. In addition to medical bills, PIP might cover costs like lost wages and replacement services (to pay for chores and normal tasks you can't do because of injuries).
Only a handful of states require drivers to carry PIP coverage.
Insurance laws in many states only require drivers to have basic liability insurance. But liability insurance only covers the damages and injuries you cause to others. If you want insurance that covers your own vehicle, you'll need comprehensive coverage (often called "full" coverage).
Comprehensive collision coverage will help fix your car if the other driver doesn't have insurance. But comprehensive coverage will also pay for damages to your car even if the accident was your fault.
Comprehensive coverage isn't normally required by state law. However, auto loan providers often require drivers to have full coverage until the car is completely paid off.
Getting into a vehicle collision without insurance can often result in lawsuits and debilitating monetary judgments. But driving without insurance can also carry criminal and administrative consequences.
Operating a motor vehicle without insurance is a misdemeanor in most states. A conviction generally carries up to $1,000 or so in fines, a maximum of six months or so in jail, and driver's license suspension.
When an uninsured driver gets into an accident, the Department of Motor Vehicles (DMV) normally can suspend the driver's license until the driver pays for all the damages from the accident. Also, uninsured motorists are often required to maintain SR-22 insurance verification to reinstate their driving privileges.
Many states also require proof of insurance to tag and register a vehicle. A driver who's caught driving without insurance might face vehicle registration revocation.