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?

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 - find your state in the table below for specifics.
  • 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.

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.

car insurance

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.

How much will insurance cost in my state?

There are many factors that go into an insurance rate: credit, driving history, the specific vehicle - and, of course, where you live.  Just as rates for city residents vary from the rates in rural areas, insurance premiums can change from one zip code to the next, as well as from one state to another. Your best option for finding affordable insurance that meets your needs is to compare multiple companies and quotes to make an informed decision.  The table below outlines the average cost of insurance by state per month and annually. 

Average state rates

Updating data...

State Avg. Monthly Premium Avg. 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

Source: The Zebra

Why is auto insurance required?

You need the state-required minimum amount of insurance coverage to legally drive your car on public roads. Insurance benefits both you as well as others that may be involved in an accident involving your car.  

Car insurance doesn’t need to be confusing or expensive. If you’re looking for a quote, enter your zip code below and get started today. Still looking for more information? See our additional resources below!


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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 editorial content is not subject to review or alteration by insurance companies or partners.
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