Why is Car Insurance Mandatory?

What's the reasoning behind car insurance requirements in the US?

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Is car insurance required in the United States?

Car insurance is sometimes expensive, often confusing, and almost always mandatory in the US. 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.

Why has this become the law of the land and what does it mean for you?

Why is auto insurance required? It's about liability.

The primary reason car insurance is required is because of your liability, i.e., responsibility, for any damage you cause. Although you may carry optional comprehensive and collision coverage to cover your vehicle, the coverages required by most states' laws are bodily injury and property damage insurance. These coverages — through state-specific coverage limits — provide financial relief for victims of damages you cause in an accident. Since your vehicle has the potential to cause physical or material harm, you need to carry enough insurance to cover the costs of these damages.

To legally register and drive your vehicle, you need to maintain at least your state's minimum level of liability insurance. If your vehicle is leased or financed, you may need to go above and beyond, carrying comprehensive and collision coverage with low deductibles and gap insurance. This is because the third party — usually your dealership or bank — wants to protect its investment with a higher level of coverage.

The only state in which car insurance is not required is New Hampshire. New Hampshire allows you to forgo liability insurance if you can prove you’re financially able to pay for the damages you might cause in an accident. However, you are still responsible for any and all damage you cause — so car insurance is still a sound investment.

How much car insurance is mandatory?

If your vehicle is legally registered and will be driven on public roads, you need to carry your state’s minimum liability coverage. Because car insurance is regulated at the state level, you’ll have to check with your state’s DMV department to see how much coverage is actually required.

Some states require more comprehensive insurance coverage than others. No-fault states require higher levels of coverage. These states require every driver to file a bodily injury claim with their insurance company after an accident, which raises insurance costs. No-fault states require you to carry Personal Injury Protection (PIP) coverage as well as bodily injury and property damage coverages. PIP covers the cost of medical bills for you and your passengers in the event of an accident. The level of required PIP coverage varies by state.

Find your state below to see how much minimum car insurance is required where you live.

Why is auto insurance required? Key takeaways.

Because you can harm others while driving, you need to have liability insurance to ensure you can repay damages in the event of an accident.

How much insurance you need depends on where you live and the ownership status of your vehicle. If you’re leasing or making payments on your vehicle, you’re required to carry higher levels of insurance than if you own the vehicle outright.

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Ava LynchSenior Analyst

Ava worked in the insurance industry as an agent for four-plus years.

Ava currently provides insights and data analysis as one of The Zebra's property and casualty insurance experts. Her work has been featured in publications such as U.S. News & World Report, GasBuddy, Car and Driver, and Yahoo! Finance.

About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

  • The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.

  • The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.

  • The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.

  • The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.