Public policy considerations


Public policy considerationsEdit


In the United States, automotive insurance covering liability for injuries and property damage is compulsory in most states, but different states enforce the insurance requirement differently. In Virginia, where insurance is not compulsory, residents must pay the state a $500 annual fee per vehicle if they choose not to buy liability insurance.[20] Penalties for not purchasing insurance vary by state, but often include a substantial fine, license and/or registration suspension or revocation, and possible jail time. Usually, the minimum required by law is third party insurance to protect third parties against the financial consequences of loss, damage or injury caused by a vehicle.

California and New Jersey have enacted "Personal Responsibility Acts" which put further pressure on all drivers to carry liability insurance by preventing uninsured drivers from recovering non economic damages (e.g. compensation for "pain and suffering") if they are injured in any way while operating a motor vehicle.

North Carolina is the only state to require that a driver hold liability insurance before a license can be issued. North Carolina does allow for a "fleet license" to be issued if the license holder has no insurance, however the fleet license only allows for the driver to operate vehicles owned and insured by their employer. The license holder must produce a state form (DL-123) to prove they have insurance, requiring the signature of an insurance agent, in addition to a ten dollar fee, in order to convert the fleet license to a full license.

Some states require that proof of insurance be carried in the car at all times, while others do not. For example, North Carolina does not specify that proof of insurance must be carried in the vehicle; it does, however, require that a driver have that information to trade with another driver in the event of an accident. Some states allow for an electronic insurance card to be produced on a smartphone

Arizona Department of Transportation Research Project Manager John Semmens has recommended that car insurers issue license plates and be held responsible for the full cost of injuries and property damage caused by their licensees under the Disneyland model. Plates would expire at the end of the insurance coverage period, and licensees would need to return their plates to their insurance office to receive a refund on their premiums. Vehicles driving without insurance would thus be easy to spot because they would not have license plates, or the plates would be past the marked expiration date.[21]

The compulsory insurance debateEdit

A brief history of car insuranceEdit

With the invention of the automobile in the late 19th century came the inevitable side effect of automobile collisions.[22] As automotive collisions increased in frequency, it became clear that, unlike other torts, which relied on personal responsibility, there was a possibility that automobiles would need to be governed by laws because "[t]here was no way of assuring that even though fault was assessed the victim of an automobile collision would be able to collect from the tortfeasor."[22]

This led Massachusetts and Connecticut to create the first financial responsibility and compulsory insurance laws. Connecticut's 1925 financial responsibility law required any vehicle owner involved in a collision with damages over $100 to prove "financial responsibility to satisfy any claim for damages, by reason of personal injury, to, or death of, any person, of at least $10,000."[23] This early financial responsibility requirement only required vehicle owners to prove financial responsibility after their first collision.[22] Massachusetts also introduced a law to address the problem of collisions, but theirs was a compulsory insurance, not financial responsibility law. It required automotive liability insurance as a prerequisite to vehicle registration.[24]

Until 1956, when the New York legislature passed their compulsory insurance law, Massachusetts was the only state in the U.S. that required drivers to get insurance before registration. North Carolina followed suit in 1957 and then in the 1960s and 1970s numerous other states passed similar compulsory insurance laws. Since the genesis of automotive insurance schemes in 1925 nearly every state has adopted a compulsory insurance scheme.[22]

Requirements by stateEdit

The tables below contain minimum liability requirements for vehicle owners within the United States. They are divided into two categories: compulsory and non compulsory. See the table on the right for an explanation of the values.

Understanding the tables: XX/XX/XX = Bodily Injury Limit (per individual)/Bodily Injury Limit (per accident)/Property Damage Limit For example, limits of 25/50/20 means after "an accident each person injured would receive a maximum of up to 25,000 with only 50,000 allowed per accident (ex. 2 people needing 25,000, if the need is more such as 3 people needing 25,000 then whoever files first gets first access to the 50,000 limit and you may be sued for the rest if the accident was your fault). The last number refers to the total coverage per accident for property damage which in this case would be 20,000."[25]

State [25]Minimum Insurance RequirementsNon compulsory insurance state
District of Columbia10/25/5
Florida0/0/10FL requires at least $10,000 in PIP Coverage. Taxis: 125/250/50[28]
Maryland30/60/15 [33]
Massachusetts20/40/5In lieu of auto insurance, individuals can either (1) deposit $10,000 in cash, stocks, or bonds with the State Treasurer[34] who will issue a receipt[35] or (2) obtain a motor vehicle liability bond equal to the state minimum limits.[36]
New HampshireN/A (Personal Responsibility Only)Yes, however you would be held responsible by law to pay for any bodily injuries or property damage in the event of an accident.[39]
New Jersey0/0/5NJ requires at least $15,000 in PIP Coverage
New Mexico25/50/10
New York25/50/10
North Carolina30/60/25
North Dakota25/50/25
Rhode Island25/50/25
South Carolina25/50/25
South Dakota25/50/25
Texas30/60/25Yes, however financial responsibility should then be established through a surety bond or a deposit of $55,000 with the comptroller or the county judge.[41]
VirginiaN/A (Personal Responsibility Only)Yes, however you will be required to pay $500 a year to drive uninsured in Virginia. (The fee can be prorated if you want to become insured in a shorter time than a year.) However this fee to the state DMV is NOT insurance; you would be held responsible for any injuries or damage in an accident.[42]
West Virginia20/40/10

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