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UPDATED: Mar 13, 2020
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Many people are curious whether auto insurance as a legal requirement. Our first answer to that question is always yes; it’s the right answer for many reasons. Read this article to learn more about auto insurance requirements.
Criminal Penalties for Failure to Drive with Insurance
Driving without insurance is a misdemeanor on the first offense, but can carry stiff penalties even if you are only pulled over once.
For example, the state of Alabama, they have very strict laws on driving without insurance. The first offense is a fine of up to $500.
Also, you can be put in prison for up to three months. The judge may also impose a suspension of your driving license with a $200 reinstatement of the registration fee. Finally, you will be required to show proof of insurance for up to a year after you were caught driving without it.
All of that trouble all for just failing to carry auto insurance!
Sweet Home Alabama
Alabama is not the only state that takes a dim view of driving without insurance.
In the state of Connecticut, you could get anywhere from a $100-$1,000 fine on the first offense. Also, you would normally have your license suspended for one month. Then you must show proof of reinstated insurance for one month.
Delaware Speaks Out
In Delaware, a first offense carries a fine of $1,500-$2,000 on the first offense! They are very serious about driving with proper coverage!
In these states that enforce the law on carrying insurance so assertively, things can only get worse on a second or third offense. Repeated high fines and additional penalties can be imposed that can send the driver into financial distress just trying to keep up.
Deciding not to pay for insurance is much more costly in the long run than paying for the insurance in the first place!
Other Reasons You Need Insurance
There are a number of other reasons that you need insurance. We have listed a few of the most important ones below.
- Protection from civil lawsuits due to injuries and damage
- Replacement coverage
- Comprehensive insurance protects you from non-accident damage such as fire or flood.
- Extra coverage for medical or roadside assistance
- You can add people to your policy to cover them as well.
In all of the above cases, you are obtaining protection from legal actions against you due to negligence on your part on the road.
Even if you think you could not have avoided the accident, you are liable for damages that you are responsible for if the crash is ruled your fault. Having insurance keeps people from suing you to collect these damages from your bank account.
The Best Reason to Have Insurance
When it comes to replacing your car after an accident, you can’t beat a system that will automatically give you money to buy a new car if you totaled your old one!
That’s what collision insurance does. An insurance adjuster may first come to your house or place of business to make their analysis of what the damage will cost. But if they rule it a loss, you will be given money to purchase a car that is of the same approximate value as your car was at the time of the accident.
Replacing a Vehicle
Keep in mind that you cannot purchase a vehicle that is worth more than the car you wrecked. Using insurance to get a new car that is worth more doesn’t work and could be considered insurance fraud if you falsify information or do it on purpose. So make sure you are always honest with your insurer on what happened.
Insurers know the value of your current car, and they will never reward you more money than they should to repair or replace your damaged vehicle.
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If you have comprehensive coverage, then you will also be protected for unforeseen events that have nothing to do with an accident.
Events such as floods, weather damage, fire, and theft or vandalism are covered through comprehensive insurance coverage. This is an optional coverage that you have to opt-in for and is not automatically included on your policy.
Extra Coverages: Medical and Roadside Assistance
In addition to the other coverage, you can opt for medical coverage, which pays for hospitalization, doctor’s bills, and other expenses that might arise as a result of an accident. This kicks in as an additional medical coverage that can sometimes complement your current coverage and serve to fill in the gaps of your health coverage.
It also offers extra money to pay for the other driver’s medical care if you injured them in an accident.
Roadside assistance is an extra coverage that allows you to have a tow truck or wrecker come to your site to tow you in when you are stranded on the side of the road. This coverage works in other instances besides an accident so it might be worth it if you travel late at night or have a flat tire.
Auto insurance also has many other policy add-ons that allow you to add people to your policy or opt-in to other services that you might find helpful.
Most people do not choose to opt into every coverage, and you should carefully consider which ones you want. Some riders or add-ons cost more than others. But consider whether or not having the coverage could help you to avoid high costs in particular instances of when you need help.
Protect Your Investment
Aside from all of the legal risks that you take by not carrying insurance, carrying adequate coverage is essential to protecting your investment.
Your car is one of the most expensive possessions you own. By carrying adequate coverage, you can have the peace of mind in knowing that your investment is taken care of in the event of an accident.
In a Nutshell
We’ve talked about many reasons why you should have insurance. It’s the law.
It’s illegal to drive without it in every state except New Hampshire and Virginia. It protects you to facing stiff criminal penalties and fines imposed by the court for failure to carry insurance. It protects you from civil lawsuits that others may bring against you for negligence on the road.
You can also save additional money by adding riders or additional coverages that keep you safe on the road if stranded and increase your peace of mind.
With so many advantages, it’s easy to see why carrying insurance is best.
Shop and Compare
The best way to ensure that you have enough coverage is first to be aware of your minimum state liabilities that you are required to carry.
Also, check out the extra coverage to see if there is anything that would benefit you. Ask the right questions to be sure that you get your questions answered and read the fine print to see what is excluded.
Questions to Ask
When you get your quote for insurance, consider asking the following questions to see if the coverage is right for you:
- How many other people (kids) can I add to my policy?
- What does the policy not include?
- How long does it take to pay out claims?
- How long has your company been in business?
- Is your customer service good?
These types of directive questions will often get an agent or person giving the quote to elaborate more on the specific policies of the company, and it will ensure that you understand what you are getting before you sign on the bottom line.
Having adequate coverage is the priority. You should also have an idea of the time it takes for the company to pay out claims and you should choose a company that has excellent customer service. You never know when you might have a fender-bender or just think of additional questions that you need to be answered.
By comparing your current insurance to others, you will have a better idea of which policy and company are best for your needs.