Ways of Showing Proof of Financial Responsibility

Posted by on Mar 10, 2016 in Financial Responsibility | 0 comments

Showing proof of financial responsibility is a basic requirement for drivers in the US. It refers to a law which requires individuals to demonstrate capability to pay compensatory damages that result from accidents wherein they are at fault.

According to Greenfield, WI car accident lawyers, proof of financial responsibility may be shown by carrying an auto liability insurance policy, like what is mandated in 48 US states, or by demonstrating capability to pay compensation through ways approved by the state. In New Hampshire for, example, depositing cash or posting a bond with the state is enough for drivers to be able to show compliance with the state’s Motor Vehicle Financial Responsibility requirement; drivers, however, can still purchase a car insurance policy, although having one is not really required. In the state of Virginia, on the other hand, drivers may instead pay the uninsured motor vehicle fee to their state’s Department of Motor Vehicles (DMV) if they wish to register their vehicle as uninsured.

In the states where auto liability insurance is strictly required, 38 are under the tort system, nine are known as “no-fault” states, while the remaining three are called “choice states.” “Choice states,” which include Pennsylvania, New Jersey and Kentucky, allow their drivers to have either tort insurance coverage of the no-fault coverage. “No-fault” states, which include Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New York, North Dakota, and Utah, compensatory damages are paid to the drivers (involved in the accident) by their respective insurance providers, regardless of who is at fault in the accident. In tort states, however, victims of accidents may file a civil lawsuit against the at-fault driver, whose insurance provider pays the court-approved amount of compensation to the victim (though auto insurance is not mandated in New Hampshire, drivers who rather decide to carry it may purchase a tort insurance policy; this is the same case in the state of Virginia).

Millions of drivers, however, purchase a car insurance policy and then stop paying its premiums right after renewing the registration for their car and license. The most common reason for this is the high cost of auto insurance. By using free auto insurance quotes, however, drivers will find the most ideal insurance deal, regardless of their driving history, credit history, age and driving experience.

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