Car Insurance Requirements by State

Compulsory Car Insurance: Car Insurance Requirements by State

We break down required, or compulsory, car insurance requirements state-by-state to help you understand regulations and maximum limits.

What Types of Car Insurance are Required?

Every state in the U.S. (and the District of Columbia) requires its drivers to have some minimum form of auto insurance.  How this requirement is enforced and what specifically it mandates varies from state to state.  In other words, whether specific types of car insurance are compulsory and the minimum auto coverage requirements all depend on what state you live in.

In almost every state, Bodily Injury (BI) and Property Damage (PD) Liability insurance is a requirement. Each state has set different minimum requirements on what pay out limits make a liability insurance policy acceptable.

In California, for example, the minimum acceptable liability insurance is as follows: $15,000 limit on injury or death to one person (BI), $30,000 limit on injury or death to multiple people (BI), and $5,000 to damage on property (PD).  This requirement is usually expressed as (15000/30000/5000).

What this means is, if a driver in California with the minimum possible liability insurance were to hit a car full of people, his or her insurance could cover up to $15,000 of the medical costs for any one person, but could only cover up to $30,000 total for the resulting medical expenses for all of the people in the car.  Furthermore, that driver’s insurance could cover up to $5,000 of the property damages done in the accident.  If the damages and expenses to the other drivers totaled more than his liability insurance policy could pay, that driver could be held financially responsible to pay for the excess.

There are some other types of auto coverage which are required by law in some states.  For example, in the no-fault states, Personal Injury Protection (PIP) is compulsory in addition to minimum liability insurance.  Some states also require Uninsured Motorist (UM) and/or Underinsured Motorist (UIM) coverage.

Penalties for Driving Without Minimum Coverage

The possible penalties for driving without meeting the minimum coverage requirements vary from state to state.  Common penalties include substantial fees and suspension or revocation of uninsured drivers license or vehicle registration.  In some states, such as New Jersey, it is illegal to operate or knowingly allow another person to operate any automobile not adequately covered by liability insurance; violators of this law can even receive jail time.

Required Coverage For Financing Vehicles

If you are financing a vehicle purchase on credit through a bank or credit union, your state may require you to have a Full Coverage policy with Collision and Comprehensive insurance coverage.  Even if this is not a legal requirement of the state, the institution financing your purchase will likely require you to have such coverage on the vehicle.

Basic Auto Insurance Requirements by State

The following table, assembled by the Insurance Research Council and published by the Insurance Information Institute, displays a simplified summary of the car insurance required of drivers in each state, the minimum limits on liability insurance, and how the state verifies insurance information with insurance agencies.