Automobile Insurance is required by law to create a safety net for drivers who may be involved in an accident or other mishap. Automobile Insurance coverage is underwritten to prevent the driver, or the owner of another vehicle, from suffering large financial losses in the event of an automobile accident.
As the operator of a vehicle, if you are stopped by a law enforcement official or if you are involved in an accident, you are required by law to show proof of automobile insurance. If you are stopped by a police officer and can't show proof of insurance, you may be ticketed and required to show proof of insurance in court to have the ticket nullified.
In some states, you have to show proof of insurance to register or renew the registration of your vehicle. All states have requirements of at least a minimum statutory amount of liability insurance or certain other modes of coverage such as surety bonds for a specified dollar amounts or certain amounts of cash that are deposited with the Department of Motor Vehicles (DMV).
Automobile insurance is required because you, the driver, are legally liable for injuries suffered by others and damage to someone else's property while operating motor vehicles. This is especially true if you are deemed to be at fault in an accident.
What happens if you are not covered and you are involved in an accident while driving? You driver's license may be suspended and you may be taken to court. If you are found to be at fault, the courts may fine you and still hold you responsible for any damages that are incurred. This, in return, will increase your debt load and it may cause a negative affect on your credit score.
There are a variety of automobile insurance options regarding policy limits and types of coverage, including low cost programs offered by individual states. Although most states only require minimum coverage, due to the high costs of repairs and medical care, it may be a good idea to purchase higher amounts of automobile insurance coverage.