Compulsory Car Insurance Law: Based on a Hundred-Year Old Supposition that Cars can Collide

Many drivers have often wondered why car insurance, instead of health insurance, is mandatory in the US and that, despite its being a mandate, laws concerning it are set only at the state level, thus the differences of car insurance laws among states.

Drivers who get caught driving without insurance face the risk of having their license suspended. To have their license (and driving privileges) reinstated, they will have to file a court-imposed SR-22 certificate, a documentation that their car insurance will need to send their state’s Department of Motor Vehicles (DMV) to prove that there are already insured. An SR-22 usually lasts for three years but may be extended by a judge to five years if he or she sees appropriate.

Mandating car liability insurance stems from the supposition (which goes more than a hundred years back) that cars can collide, injure people and cause property damage in the process and that the driver at-fault may not have the financial capability to compensate his or her victim. In other words, car liability insurance is protection for people and their properties.

The first compulsory car insurance laws were passed in 1925, in the states of Massachusetts and Connecticut; other states followed suit, enacting their own mandatory car insurance liability laws. To date, New Hampshire and Virginia are the only two states that do not mandate car liability insurance for all drivers. Instead of carrying liability insurance, drivers in New Hampshire, who choose not to carry car insurance, simply need to show they are capable of paying for damages in the event of an at-fault accident; this can be done by posting a bond or cash that is equal to the amount of damages in the crash. In Virginia, drivers can have insurance or pay the state a significant fee if they choose to register their vehicle as uninsured.

The types of car insurance coverage that drivers can choose from are the full tort and the no-fault coverage (no-fault is also known as personal injury protection or PIP). In full tort states, the drivers involved in a car accident can file a civil lawsuit against each other to determine who is at fault (or has greater fault) in the accident and to seek compensation from the liable party. Compensation to the victim is paid by the liable party’s insurance provider. In no-fault states, however, a lawsuit no longer needs to be filed since compensation is paid to drivers by their respective insurance providers regardless of who is at fault in the accident. Due to the absence of lawsuits, compensation is paid much faster in no-fault states.

Because many drivers find car insurance too expensive, they, therefore, rather risk driving without being covered. A definitely unwise decision, according to Greenfield, WI car accident lawyers, which says that, in the event of an accident, uninsured drivers can spend so much more (in compensating their victim) than what they would spend for insurance premiums.

Author: Dean

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