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Is Car Insurance Required? A Detailed Explanation |Beem|

Car insurance provides financial protection in an accident or other covered event. This blog explores if you require car insurance and how much it costs in different states. Let’s dive in!
is car insurance required
Is Car Insurance Required? A Detailed Explanation |Beem|
Car insurance is mainly required due to your liability, or duty, for any harm to people or property while driving the vehicle. Let's learn if you require car insurance in your state.
In this article

Is car insurance required in your state? Car insurance is virtually mandatory in almost all US states. But, as it often turns out, car insurance policies get complicated and expensive, so many US citizens become intimidated. Depending on where you live, there are different requirements for auto insurance.

Individual state governments at the state level set and enforced car insurance laws. All American states, except one, mandate that drivers carry an active car insurance policy. New Hampshire is the only state where you are not legally obligated to get auto insurance as long as you can demonstrate your financial responsibility.

Why Do You Need Car Insurance?

Car insurance provides financial protection in an accident or other covered event that damages your car or another person’s car or injures someone else. It helps to cover the costs of repairs, medical bills, and other expenditures resulting from the car accident.

If you are found to be driving without insurance in a place where it is required, you may face legal penalties. The penalty may vary from fines and license suspension to jail time. In addition, if you are involved in an accident and do not have insurance, you may be personally responsible for covering the costs of any damage or injuries that result from it.

Why is Car Insurance Mandated?

It’s all about fixing responsibility.

Car insurance is mainly required due to your liability, or duty, for any harm to people or property while driving the vehicle. Considering that your vehicle has the potential to cause physical or material harm, you must have enough insurance to cover the costs of damages if they occur.

Although you have optional comprehensive and collision coverage to cover your vehicle, most state laws require bodily injury and property damage insurance. These coverages, which have various state-specific coverage limits, confirm financial relief for victims of damages if you cause an accident.

Minimum Car Insurance

You must maintain at least the minimum liability insurance set forth by your state. It will help get your vehicle registered and drive it legally on the road. If your vehicle is leased or on loan, you might also need comprehensive collision coverage with low deductibles and gap insurance. This is because the third party, which is typically your dealership or bank financing the loan, is required to safeguard its investment with increased coverage.

New Hampshire is the only state where auto insurance is not mandated. This state allows you to forgo liability insurance if you can pay for the damages resulting from the accident. However, you are still responsible for any damage you cause. Therefore, instead of having to shell out a considerable sum out of pocket at the time of an accident, it is better to make a sound investment in car insurance.

And while you are at it, ensure you have the proper car insurance coverage according to your state’s laws and regulations.

How Much Car Insurance Is Mandatory?

Noting that state authorities regulate car insurance, check with your state’s DMV department to determine how much coverage is required. If your vehicle is legally registered and driven on public roads, you must carry the required liability insurance mandated in your state. More comprehensive insurance coverage is also mandated in some states.

No-fault states require higher levels of coverage. This implies that if you reside in a ‘no-fault’ insurance state, you will also be mandated to carry personal injury protection coverage (PIP), irrespective of who is at fault in the collision. This raises insurance rates, but in the event of an accident, PIP will pay for your and your passenger’s medical expenses. Each state sets its requirements for PIP coverage.

How Much Does Car Insurance Cost In Different States

Apart from one’s location and state, various factors go into an insurance rate: Credit, driving history, and the specific vehicle. Just as rates for city residents vary from the rates in rural areas, insurance premiums can also change from one zip code to the next and from one state to another. The easiest way to discover the best quote and an insurance policy that effectively satisfies you requires comparing prices from different providers and making an informed choice.

The average monthly and yearly insurance costs per state are shown in the table below:

State Average Monthly PremiumAverage Annual Premium
Alabama                                              $147$1,767
Alaska      $138 $1,658
Arizona       $139$1,664
Arkansas    $176$2,109
California   $142$1,709
Colorado       $171$2,053
Connecticut      $172 $2,066
Delaware      $184 $2,213
Florida      $222 $2,668
Georgia       $167 $1,998
Hawaii   $128$1,533
Idaho$113 $1,360
Illinois   $147$1,763
Indiana       $123$1,477
Iowa      $121$1,455
Kansas   $160    $1,922
Kentucky    $214    $2,563
Louisiana    $243   $2,910
Maine    $105    $1,256
Maryland $173   $2,079
Massachusetts    $126    $1,508
Michigan   $260    $3,118
Minnesota   $152   $1,818
Mississippi   $135    $1,620
Missouri   $156    $1,875
Montana$142    $1,700
Nebraska    $143    $1,721
Nevada   $149    $1,790
New Hampshire$113$1,359
New Jersey$184$2,213
New Mexico       $127$1,529
New York     $226  $2,716
North Carolina$102    $1,221
North Dakota   $168$2,015
Ohio$105$1,254
Oklahoma$156$1,875
Oregon$150$1,795
Pennsylvania$149    $1,783
Rhode Island   $237    $2,843
South Carolina    $149    $1,784
South Dakota   $142$1,703
Tennessee$131 $1,568
Texas      $167$2,008
Utah$133$1,591
Vermont      $108$1,291
Virginia$125 $1,497
Washington$132$1,587
Washington, D.C.$184$2,204
West Virginia$159$1,905
Wisconsin$117$1,406
Wyoming$142$1,702

Conclusion

We hope car insurance is transparent and manageable for you now. You must have the state-required minimum insurance coverage to drive your car on public roads legally.

More prominent insurance coverage benefits you and others who might be affected by an accident involving your car. So start the process today and contact your insurance agent for the best-personalized quote. If you are looking for more information and guidance, we are here for you.

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Nivedita Majumdar
Nivedita Majumdar
A journalist at heart, Nivedita is a passionate storyteller who thrives on informing readers about what matters to them. When not typing away on her keyboard, she is looking to savor new life experiences (on budget)!

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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