Is car insurance mandatory in the USA?
Asked by: Ms. Lorine Tillman II | Last update: June 16, 2025Score: 4.4/5 (14 votes)
Is it illegal to not have car insurance in the USA?
Driving without insurance is against the law in virtually every U.S. state. The consequences of driving without insurance can vary dramatically, with penalties ranging from a slap on the wrist to large fines and even jail time.
Which US states do not require car insurance?
Although leasing or financing offices may require one or the other. New Hampshire and Virginia are the only states that do not require auto insurance. However, if you choose not to purchase car insurance in these states, you would still be held liable for any property damage or bodily injury caused by their vehicle.
Do I need car insurance in the US?
In the USA, car insurance is typically mandatory in almost all states, with drivers required to carry a minimum level of coverage.
When did car insurance become mandatory in the USA?
However, auto insurance didn't become mandatory until much later. The first mandatory auto insurance law was passed in 1925 in Massachusetts. This groundbreaking legislation required drivers to purchase auto insurance before registering their vehicles. This set a standard for other states to follow suit.
Why is car insurance mandatory in USA?
Why is car insurance legally required?
Having car insurance is required by law in most states. If you are at fault in a car accident, the auto liability coverage required on your car insurance policy helps pay for covered losses, such as the other party's medical bills and damage to their vehicle or other property that results from the accident.
Which insurance is mandatory in USA?
Car insurance is required by law in all states, except in New Hampshire and Virginia. In New Hampshire, drivers are only required to show proof of their financial capability to cover for injuries and damages for accidents that they cause.
Why are we forced to have car insurance?
By requiring car insurance in almost every state, U.S. car insurance laws help financially protect individuals in the event they cause or are involved in an accident. These laws attempt to ensure that every driver has insurance to cover a minimum level of costs for injuries and property damage they're responsible for.
Is car insurance a federal law?
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.
Do you actually need car insurance?
Every U.S. state requires you to have liability coverage except for New Hampshire and parts of Alaska. But you might be asking, How much auto insurance do I need? Just know, liability coverage isn't an option. You're required to get at least your state's minimum liability just to drive legally almost anywhere.
Which state can you drive without car insurance?
New Hampshire is the only state that doesn't mandate car insurance. However, drivers who choose not to buy car insurance must prove they have sufficient funds to meet the state's financial responsibility requirements (PDF) in the event they cause an accident.
Why was car insurance invented?
Why was auto insurance created? Liability car insurance was created to help pay for the expenses associated with an at-fault accident. Like most other types of insurance, auto insurance was created because there is a financial need for it.
What happens if I don't insure my car?
Authorities can charge you with legal offenses if an officer finds that you can't provide insurance upon their request after a speeding incident or a car accident. Stuart Winchester, CEO of the insurance shopping startup Marble, says your vehicle could be impounded, which is common in states including California.
Is there a penalty for no insurance in the US?
The fee for not having health insurance (sometimes called the "Shared Responsibility Payment" or "mandate”) ended in 2018. This means you no longer pay a tax penalty for not having health coverage. If you don't have health coverage, you don't need an exemption to avoid paying a tax penalty.
What states in the US don't require car insurance?
Which states do not have mandatory car insurance? New Hampshire and Virginia are the only two states that don't require car insurance. In Virginia, drivers can pay the state a fee of $500 instead of buying car insurance, but that leaves them on the hook for damage they cause in an accident.
What states require auto insurance?
Yes. Every state, except for Virginia and remote parts of Alaska, requires drivers to have a minimum amount of liability car insurance in order to drive legally.
How much does car insurance cost in the USA?
Full coverage car insurance costs an average of $2,638 per year, while minimum coverage is $767 per year. On a monthly basis, full coverage averages $220, with minimum coverage averaging $64 per month.
Do you need insurance if you have a license but no car?
You should still have insurance coverage if you're a licensed driver who regularly borrows or rents vehicles. Not all companies offer non-owner insurance policies, so you'll have to shop around.
Can you refuse to use insurance?
You may choose not to use insurance if the service you need isn't covered, or it's less expensive if you pay out of pocket.
Is it illegal to not have car insurance in the US?
Cons. In every state except New Hampshire, not having insurance is illegal. You could face fines, penalties, license suspensions or revocations, and/or registration suspension and revocations.
When did car insurance become mandatory by state?
SAN FRANCISCO — The California Supreme Court on Monday unanimously upheld the 1984 state mandatory auto insurance law requiring motorists stopped for traffic violations to prove they have liability coverage or eventually face losing their licenses.
Is car insurance a must in USA?
Car insurance laws are set and enforced at the state level, and 49 of the 50 states in America require all drivers to carry an active car insurance policy. New Hampshire is the only state in which you are not legally required to have car insurance, as long as you can show proof of financial responsibility.
When did insurance become a thing?
Life insurance began to emerge in the 16th and 17th centuries in England, France, and Holland. The first known life insurance policy in England was issued in 1583. 6 But, lacking the tools to properly assess the risk involved, many of the groups that offered insurance ultimately failed.
How does no fault auto insurance work?
No-fault insurance refers to how injuries are covered by car insurance. In a no-fault insurance state, if you're injured in an auto accident, you would file a claim with your own insurance company to pay for related medical costs. This is regardless of fault.