Why is insurance mandatory in the US?

Some states still require you to have health insurance coverage to avoid a tax penalty. Going without health insurance saves you money since you’re not paying premiums, but it could put you at financial risk if you get injured or develop a serious illness.

Why is it a legal requirement to have car insurance?

Is car insurance a legal requirement? Yes, it’s a legal requirement to have an insurance policy in place if you own any road worthy vehicle. It provides financial protection if you have an accident, and it can also cover injuries to other drivers, pedestrians and passengers in your car.

Do drivers in the US legally have to carry auto insurance?

Yes, federal law requires all drivers to have car insurance so the interests of pedestrians and other motorists are protected in a crash. Most states have laws that mandate car insurance as well, with each state establishing its own required coverage amounts and penalties for failure to have insurance.

What happens if you don’t have car insurance in America?

What happens if you don’t have car insurance? Motorists who are pulled over by law enforcement and do not have auto insurance may receive fines, have their automobile impounded, and/or receive a license suspension. Jail time for this offense is rare except for multiple offenders.

When did car insurance become mandatory in the United States?

Generally, auto insurance became mandatory in 1927. The first state to offer auto liability insurance was Connecticut, in 1925. Connecticut required drivers to demonstrate financial responsibility in the event of an auto accident resulting in injury, death, and property damage.

Why is car insurance mandatory but not health?

Car insurance is required because driving is potentially a negative externality, which is offset when the driver who caused the accident pays the aggrieved party for damages. The Affordable Care Act used to require people to acquire health insurance or pay a tax penalty.

What happens if you get caught driving without insurance?

Failing to have car insurance can result in six to eight penalty points on your driving licence. These points stay on your driving record for 4 years. You can be disqualified from driving if you have 12 or more penalty points within three years.

What state has no car insurance?

There are only two states where car insurance is not mandatory for all drivers: Virginia and New Hampshire. In Virginia, an uninsured motor vehicle fee may be paid to the state, while in New Hampshire, vehicle owners have the option to post cash bonds.