Is Auto Insurance Really Mandatory?

auto insurance mandatory

Amidst the nationwide debate over President Obama’s major health care initiative, an interesting question is frequently posed: Why is auto insurance mandated by the federal government when health care coverage is clearly not?

While that statement is certainly thought-provoking, it’s not entirely accurate.

Types of Auto Insurance Coverage

The first problem with the assertion is that auto insurance coverage is only partially mandated. There are a handful of elements that make up what is commonly imagined as a traditional auto insurance policy.

The three main areas of insurance coverage are as follows:

    • Collision Coverage. This covers damage on your vehicle in case of an accident.
    • Comprehensive Coverage. Comprehensive coverage protects your car from non-collision damage like theft, vandalism and acts of nature like hurricanes and floods.
    • Liability Coverage. This coverage is meant to protect you in the event you do damage to others or their property (e.g. their car, mailbox, etc.), while driving.

There are several potential add-ons — uninsured motorist coverage, medical pay, auto repair insurance, etc. — but collision, comprehensive and liability are usually the big three.

However, tou are not forced to insure your car with comprehensive coverage against theft, hurricanes and other unfortunate events. You also are not required to purchases collision coverage to cover the cost of damage to your own vehicle.

Of this trinity, only liability coverage is mandated by the U.S. government.

The Rules Behind Liability Coverage

Your only compulsory car insurance responsibility is liability coverage, which protects the health of others in your car, and covers the damage you’ve done to other people and their property.

A great number of people may not be able pay for the injuries they sustained from an auto accident that was someone else’s doing, which is why liability coverage is the most enforced auto insurance coverage type in the nation.

In 49 out of the 50 states, the one exception being New Hampshire, liability coverage is necessary.

While collision and comprehensive coverage is not required by law, it might be in your interest to do so financially.

The New Hampshire exception to liability insurance unearths other factual inaccuracies when asserting that the government mandates auto insurance. In fact, it’s not the federal government who creates this requirement. Auto insurance laws rest with each individual state, which sets their own limits and restrictions on auto coverage.

So while auto insurance mandates are interesting to consider in the context of the health care debate, the two issues are not completely analogous. Auto insurance is only partially mandatory, and that mandate comes from state governments with their own specific needs and laws — not the federal bureaucracy in Washington.

Josh joined CoverHound as Vice President, Communications in August of 2011 after leaving QuinStreet where he served as Senior Managing Editor directing the content strategy of more than 100 proprietary sites. Prior to his time at QuinStreet, Josh was the Senior Editor at Knewton where he managed the content development and social media teams.

He spent the first of half of his career in academia, teaching creative writing and composition classes at Brooklyn College. He continues to analyze the writing progress of college students across the country for the RAND Corporation.

Josh earned a BA from Amherst College and an MFA in fiction writing from Brooklyn College.