Auto Insurance Law

Be aware of the auto insurance law if you are considering an auto insurance policy
Auto insurance law exists to protect the public. It is a public policy initiative, which is designed to ensure that no individual, nor society as a whole, will suffer as a result of wrong doing. While many people may wonder why auto insurance law mandates that they purchase liability insurance, while other types of insurance such as health insurance remain mostly optional that is why always consider several quotes before buying a car insurance, there are many clear reasons why auto insurance law dictates that drivers must all be insured.

What is Auto Insurance Law

Auto insurance law mandates that every driver purchase liability insurance on their vehicle. If a driver does not have proof of liability insurance, he cannot register a car. Most dealers of new or used cars will not allow a customer to drive a purchased vehicle off of a lot without proof of liability insurance. In this way, as well as by imposing penalties for not carrying proof of insurance, the government aims to ensure that no cars are being driven without a valid liability insurance policy.

While the exact minimum coverage limits vary by state, in every case, liability insurance is legally mandated. Failure to have liability insurance can result in fines ranging from a few hundred dollars to a few thousand dollars. Some jurisdictions will allow officials to impound your car if you don’t have insurance on it. In some cases, you may even be subject to jail time if you do not have proper insurance.

Why Does Auto Insurance Law Exist?

Auto insurance law is an important social policy if you want a new car insurance policy. If every driver was not required to have auto insurance liability law, some drivers might cause damage to others and be unable to pay for the damage. For example, if a driver got into a car accident, he might injure another person and cause thousands of dollars in lost wages and medical bills.

The innocent victim of that car accident would try to sue, but if the driver who caused the accident had no assets or insurance, he would be considered “judgment proof” because he essentially would have no money to pay in a law suit. As a result, the innocent victim of the car accident would have to foot the bills himself and not recover for his lost wages. This would be unfair. Worse, if the innocent victim had no money, society would be forced to fit the bill.

The same is true if property damage occurred. A driver might damage property and be unable to pay. The property owner, or the government if the property was public property, would thus be left facing the cost of repair for something that was not their fault,

Liability insurance prevents these situations from arising. If a person has liability insurance, that insurance covers any damage that occurs. High risk drivers pay more for their liability insurance, so the insurer can afford to pay the damages out and still run a profitable enterprise. Auto insurance law thus creates a more fair system in which there are incentives to be a responsible driver.

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