Is automobile insurance required in the US?

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Is automobile insurance required in the US?

  • automobile insurance, car accidents, cell phone, compulsory auto liability, insurance, liability, minimum limits, text messaging, vehicles

Automobile insurance

Here’s a quiz from Jennifer Slater, Sr. Account Executive, Inward Referral Manager, Aon, USA

Is automobile insurance required in the US?

In 1927 Massachusetts became the first state to require the purchase of auto liability insurance. Since then 49 states and the District of Columbia have followed suit.

What state does not require compulsory auto liability insurance?
New Hampshire (which does require proof of financial responsibility in lieu of insurance)

Such laws usually have the support of the public despite the fact that compliance is generally poor and enforcement activities are costly.

  • Compulsory auto insurance laws do nothing to protect drivers involved in accidents
    with drivers of stolen vehicles or drivers from New Hampshire (where insurance is
    not compulsory), drivers of unregistered vehicles, the insurance dodger who cancels
    a policy immediately after receiving a proof-of-insurance certificate and the hit-andrun
  • Nationwide, an average of 12.6% of drivers are “uninsured.”

Uninsured and Underinsured Motorist Liability

With an average of 12.6% of US motorists being “uninsured” and many more carrying low liability limits, it is important to consider Uninsured and Underinsured Motorist Liability coverage

Uninsured or underinsured motorist coverage can pay for injuries to you and your passengers, and in some locations damage to your property, when there is an accident and the other driver is both legally responsible for the accident and considered “uninsured” or “underinsured.”

An uninsured driver is someone who did not have any insurance, had insurance that did not meet state-mandated minimum liability requirements, or whose insurance company denied their claim or was not financially able to pay it. A hit-and-run driver also counts as uninsured as it relates to bodily injury (UMBI).

An underinsured driver is someone who met minimum legal financial responsibility requirements, but did not have payment limits high enough to cover the damage they caused. In these cases, UM or UIM can pay you for your damages. It is important to note that uninsured and underinsured motorist protections are separate, although in many states they can or must be purchased together

Workers’ Compensation coverage will cover your US employees operating motor vehicles or while passengers in motor vehicles – provided they are within the scope of employment.

Compulsory Auto Limits/Non-Owned Vehicles

Compulsory Auto Liability limits range from 10/20/10 (Florida) to 50/100/25 (Alaska and Maine)

If you carry Liability coverage for Non-Owned (employee) vehicles as part of your US Automobile program, it will apply as excess over your employees personal liability coverage if the employees use their vehicles for “business”.

However, most insurers require that your employees carry minimum limits of 100/300/50

Some personal insurers (ie Progressive) may be excluding business use exposures

–do you have employees who have not disclosed their driving activities to their personal insurers?

  • The doctrine of Negligent Entrustment applies to “non-owned” as well as owned vehicles

What are the rules on use of cell phone while driving in the US?

Most states ban text messaging while driving, and many also ban any use of handheld cell phone while driving.

States against driving and texting

See Jennfer’s full PDF here: Welcome to America_One Country with 50 Sets of Rules Aon

and the full event agenda with speakers and presentations here.