Americans have been using automobiles since the early 20th century. The launch of the Ford Model T democratized the automobile in the United States, and the growing popularity of automobiles meant an increase in car accidents. legislators then had to answer the question, who should pay for these losses?
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This is where auto insurance came into play. Car owners found that it was profitable to invest in insurance instead of paying the amount out of pocket in the event of an accident. So when did car insurance become mandatory? we will cover that next. however, you should also understand that each state has its own minimum car insurance requirements. what is required is not the same in every state.
When did car insurance become mandatory?
You didn’t always need auto insurance to drive a car. in the early 19th century, you could drive without insurance. Although auto insurance as a product first became available in 1898, according to the Insurance Information Institute, it was only in 1925 that Connecticut law recognized the financial responsibility of drivers responsible for car accidents that resulted in injuries, damages to property or death.
Connecticut’s law that holds drivers liable for injuries they cause on the road encouraged drivers to purchase liability insurance, but did not make car insurance mandatory. the law only stated that the owner of the car would be responsible for the damages. it was up to car owners to choose how to pay for damages.
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while connecticut recognized the importance of car insurance and recommended it, massachusetts signed mandatory car insurance into law in 1925. it remained the only state with mandatory car insurance for more than three decades.
new york’s legislature passed the mandatory auto insurance law in 1956, followed by north carolina’s in 1957. from then on, auto insurance picked up the pace. by 1970, 48 states had made auto insurance mandatory.
how compulsory car insurance works today
auto insurance is required by law in 48 states and the district of columbia even today. Car owners in all but two states are required to purchase auto insurance to protect themselves from potential losses in the event of an accident, theft, or vandalism.
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While 48 states have mandatory auto insurance laws, each state’s laws are different. each state has different minimum coverage requirements and has different mandatory insurance. Auto insurance laws also differ due to no-fault and at-fault laws in each state.
Although insurance is required in 48 states, New Hampshire and Virginia do not have mandatory auto insurance laws. According to the DMV, there are no regulatory laws in New Hampshire, although it is highly recommended that all drivers have insurance. Also according to the DMV, in Virginia, there are a few different ways you can provide that you are financially fit to drive without insurance. So while it’s legal to drive without car insurance in these two states, you’ll still be responsible for any costs if you cause an accident.
not all car insurance is mandatory
Times have changed, the types of cars have changed and so have the types of insurance policies. Liability auto insurance coverage is no longer the only auto insurance available. There are many different types of auto insurance coverage available today. You have so many options, like comprehensive auto insurance coverage, to protect against fire, theft, and other perils.
Alternative insurance payment structures also exist, for example pay-per-mile insurance that allows you to pay while you drive. however, liability insurance remains the only auto insurance required by law.
why do you need auto insurance?
Who will pay the damages in case of an accident? Having auto insurance will protect you from financial losses that could arise if you are in an accident. Your auto insurance will pay for repair costs, medical bills, legal fees, and lost income.
did we always need car insurance?
Although auto insurance has been around in some form since 1898, it only became mandatory in most states around 1970. Auto insurance laws are decided by the states, not the federal government. Massachusetts was the first state to make insurance mandatory, passing laws to do so in 1925.