Do I Have to Have Car Insurance?

Most states and lenders require car insurance. Here’s what you need to know about when you have to have car insurance and why.

Most people have to have car insurance. This is because all states but two require drivers to carry at least some liability coverage, and many require personal injury protection or uninsured motorist coverage as well.

Lenders often require car insurance, too. Specifically, most people who finance their vehicles have to carry collision and comprehensive coverage along with the coverage their state requires.

In this article, we will answer important questions related to the above, including:

Do you have to have car insurance?

Every state except New Hampshire and Virginia requires drivers to have at least a minimum amount of car insurance. All states require drivers to prove financial responsibility.

In most cases, you need to buy liability coverage to meet this requirement. Sometimes, though, you need to get no-fault coverage or personal injury protection as well. You might need uninsured or underinsured coverage, too.

You also may need to buy auto insurance if you have a financed car. In this situation, lenders often require collision and comprehensive coverage.

How much car insurance you have to have depends on which state you call home or where you got a loan.

In general, though, the answer to the question above is, yes, with few exceptions you have to have auto insurance to drive a vehicle.

Get caught driving without insurance and you’ll likely face several penalties. These are tied to where you live, too, although most states fine you as well as suspend your license or registration for this infraction.

Why is car insurance mandatory?

States require car insurance because it ensures drivers can pay for any injuries or damage they cause in an accident.

This is why some states let drivers prove financial responsibility rather than buy auto insurance. Their goal is to make sure the victims of an accident you cause can pay medical and other bills that result from the crash.

Lenders require collision and comprehensive car insurance to protect their assets. In this case, the asset they want to protect is the vehicle they helped you buy or lease.

Banks, credit unions and other lenders often require collision coverage because it protects you — and them — if your car is damaged in an accident. And they require comprehensive coverage because it protects both parties if something other than a crash — like fire, flooding or vandalism — damages your car.

Is auto insurance required in every state?

Every state but New Hampshire and Virginia requires drivers to carry at least a minimum amount of car insurance. And all states require drivers to show financial responsibility in some way.

Most states that require car insurance require just liability coverage. As you’ll learn below, though, some also require medical payments, personal injury protection and uninsured or underinsured motorist coverage.

In New Hampshire, if you decide to buy car insurance, you have to get a minimum of 25/50/25 coverage. This means your policy needs at least:

  • $25,000 of bodily injury liability coverage per person.
  • $50,000 of bodily injury liability coverage per accident.
  • $25,000 of property damage liability coverage.

If you decide to not buy car insurance in New Hampshire, you must prove you have sufficient funds to cover any accidents you might cause.

If you forgo car insurance in Virginia, you must pay the state a $500 uninsured motor vehicle fee. If you buy car insurance, though, you have to get 25/50/20 liability coverage.

What car insurance is required by law?

Almost all states that require car insurance require drivers to get at least a minimum amount of bodily injury and property damage liability coverage.

Some states require drivers to get these types of car insurance coverage as well as liability coverage:

Medical payments coverage

Medical payments coverage, also called MedPay, pays some of your medical bills and even funeral costs if you’re in an accident. It does the same for any passengers in your vehicle at the time of the crash.

You’re required to buy the following amounts of medical payments car insurance coverage if you live in Maine or Pennsylvania:

State Minimum amount of MedPay coverage
Maine $2,000
Pennsylvania $5,000

If you live in New Hampshire and decide to buy car insurance, you have to buy at least $1,000 of MedPay coverage, too.

MedPay coverage is either optional or not offered at all in every other state.

No-fault or personal injury protection (PIP) coverage

Fourteen states require drivers to buy at least some personal injury protection coverage. Also called PIP or no-fault coverage, it pays some of your medical and funeral expenses after an accident. It covers lost wages and ongoing treatment costs, too.

Of the states that require PIP, Utah requires the least amount of coverage, at $3,000. Michigan requires the most PIP, or no-fault, coverage of the states that require it, at $250,000.

Uninsured and underinsured motorist coverage 

Twenty states plus the District of Columbia require drivers to carry uninsured motorist coverage. Some require underinsured motorist coverage, too.

Also, New Hampshire requires drivers who buy car insurance — rather than prove financial responsibility in some other way — to get uninsured motorist coverage.

In every other state, uninsured and underinsured motorist coverage is optional.

Collision and comprehensive coverage

No state requires drivers to buy comprehensive or collision car insurance coverage. Although the law doesn’t require these kinds of coverage, you may need to buy one or both of them if you financed the purchase of your vehicle. Lenders often require car buyers to get collision and comprehensive coverage to protect their financial investments.

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