Why is Auto Insurance Mandatory in the US?


Contrary to popular belief, there’s no federal law that mandates that people in the US need to buy auto insurance. As a matter of fact, this law is set by states, which is the reason why each one has different laws. As it stands, except for Hampshire, every state requires all drivers to have an auto insurance policy.

Let’s learn about auto insurance in more detail, including why it’s mandatory in nearly all states.

How much auto insurance is mandatory?

If you want to drive your vehicle legally on the road, you’re required by law to carry a state’s minimum liability coverage. You can contact your state’s DMV department to learn about how much auto insurance you need to purchase to remain compliant with the law.

Typically, no-fault states require more comprehensive coverage compared to fault-based states. You may also require coverage for bodily injury and property damage as well as Personal Injury Protection (PIP).

Why is auto insurance mandatory?

The primary reason why auto insurance is mandatory in most states is to provide protection to people and their property. It allows a victim to get rightful compensation in the event of the carelessness or mistake of a negligent party.


An auto accident can be deadly and often leads to various injuries, which give rise to expensive medical bills and different costs. Moreover, it can render the victim unable to work, which results in loss of income.

Also, other damages such as property damage, pain and suffering, and loss of consortium are also paid to the victim to recompense for their ordeal. In the absence of an auto insurance policy, a victim will not be able to get their rightful compensation.

In essence, this law helps to protect the rights of victims who suffer damage due to the negligence or external circumstances and help them resume their normal lives.

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