Car Insurance Legal Information
Car insurance is a legal requirement and necessity. It pays for damages you cause to others, damages to your own vehicle and coverage against uninsured drivers. Failure to comply with insurance laws could lead to legal and financial trouble if you are involved in an accident. It is important to understand car insurance legal information to ensure you have the adequate insurance protection for your needs.
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Legal Requirements
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Motorists cannot legally drive without car insurance. Each state has liability insurance and financial responsibility laws that require motorists to prove they can pay for damages in an at-fault accident. Most states operate under a liability insurance system. With a liability insurance system, the party responsible for the accident pays for injuries and damages. Other states, such as Florida, Hawaii, New York and Michigan, operate under a no-fault insurance system. With a no-fault insurance system, each party is responsible for paying for his or her own injuries except in cases where injuries exceed a specific dollar amount or the accident resulted in serious injury or death.
Legal Liability
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Motorists purchase car insurance not only because it is the law but also to protect against legal liability. Not-at-fault drivers have the right to sue you for causing an accident. If you are liable for causing an accident, you also are legally responsible for paying the injured party's medical expenses, property damage, and in some cases, pain and suffering. Failure to pay legal obligations could result in a lawsuit or judgment against you. Car liability insurance pays legal costs associated with accident-related lawsuits. The coverage pays legal defense, court costs, judgments and monetary awards to the other party.
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Consequences
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The penalties for driving without valid car insurance vary from state to state. In all states and Washington D.C., the consequences for driving without insurance range from a $100 fine to a license suspension of up to a year for first-
offenders. Second- and third-time offenders face harsher penalties. In some states, if you are caught driving without insurance more than once, your license or registration will be suspended and a higher fine will be imposed. Some states will impound your vehicle or even sentence you to jail time after several offenses. After you pay to reinstate your license, most states require that you file paperwork to ensure you satisfy financial responsibility laws.
Considerations
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It is essential you provide complete and accurate information to your insurance company when you purchase car insurance. It also is imperative that you give law enforcement accurate information in case you are ever stopped, especially if you do not have insurance or valid proof of insurance. Insurance carriers are not obligated to pay for claims that result from fraudulent insurance policies. If you file a claim and the insurance company later finds out you lied on your insurance application, your claim could be denied and you could be prosecuted for committing a criminal offense.
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References
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