Why Do We Have Compulsory Auto Insurance?

Opponents of compulsory laws offer two alternatives: 1) financial responsibility laws and 2) insurance coverage that protects drivers from losses caused by uninsured motorists.

Does Compulsory Auto Insurance Reduce Number of Uninsured Drivers?

Financial responsibility laws do not require motorists to buy insurance before their cars can be registered, and they do not make it a criminal offense to drive without insurance. For drivers wrho are at fault in accidents (usually resulting in bodily injury or in more than a specified amount of property damage), these laws require that they prove they can pay damages. Generally, drivers can fulfill their legal responsibility with a liability insurance policy providing minimum required benefit limits, by posting bond for the same amount, or by depositing cash or securities in that amount. Failure to do any of these generally results in suspension of the drivers license. Get cheapest sr22 insurance online.

Critics of compulsory insurance maintain that a well-enforced financial responsibility law is at least as effective at getting drivers to purchase liability insurance as a compulsory law, and at significantly less cost. Virginia, regarded as having one of the most effective financial responsibility systems, is estimated to have about the same percentage of cars insured as neighboring North Carolina, which has one of the nations most stringently enforced compulsory laws.

It is possible that stiffer penalties—fines that are closer to the cost of buying insurance and more extensive use of computers to cross-check information—will have some success. But neither compulsory laws nor financial responsibility laws can remove all uninsured motorists from the roads, or protect people from hit-and-run drivers, drivers of stolen vehicles, and the like.

Some uninsured drivers will continue to remain outside the law’s reach. In law enforcement and in society as a whole, there are funding priorities. At some point the cost to the taxpayer of trying to identify and apprehend these drivers exceeds the cost of self- protection: the purchase of UM and UIM insurance coverage. There is evidence that consumers have already reached that conclusion for themselves.

AIRAC reports that even in states where UM coverage is optional from 92 percent to 100 percent of drivers purchase the coverage voluntarily indicating that consumers are very aware of the need for such coverage and are willing to pay the relatively small amount of additional premium for the added protection.

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