Minimum Levels of Car Insurance Required by Law

Car insurance is required in almost every state in the US. Because the levels vary by state, be sure that you are aware of what your specific state requires. Each state falls into one of three basic "categories" of insurance requirements. There are no-fault states, tort states, states that do not require insurance to register your vehicle.

States that require you to carry a minimum level of insurance can be classified as either no-fault or tort states. In the event that you are in an accident, both of these classifications of states would require you to be carrying an insurance policy that would cover any and all damage done to the other vehicle and its passengers. Minimum levels of car insurance required by law are listed in a series of three amounts. For example, California requires its drivers to carry a policy of $15,000, $30,000, $5,000. This breaks down to $15,000 bodily injury per person, $30,000 bodily injury per accident, and $5,000 property damage. Every state that requires insurance has their amounts listed this way, but the amounts vary from state to state. The difference between no-fault and tort states is that tort states require someone to be found at fault. This means that in the event of an accident, either you or the other driver will be paying for the damages done. Car insurance is even more critical in tort states because drivers could, at one time or another, be paying for damages done to another vehicle. You may find that minimum levels of car insurance are slightly higher in tort states.

There are some states within the US that do not require car insurance to register a vehicle with the DMV. However, drivers are required to show proof of financial responsibility. This means that the driver must show that he has money either in savings or in earnings that would allow him to pay for damages in the event of an accident.

Some states, regardless of their standing as tort, no-fault, or no required insurance, require their drivers to carry uninsured/underinsured motorist insurance. This insurance protects you if you are hit or if you hit a driver that is carrying either too little insurance or none at all. Regardless of your state's standing, be sure that you are fully aware of insurance laws so that you are financially protected.