Vehicle insurance in the United States
Most states require a motor vehicle owner to carry some minimum level of liability insurance.
The privileges and immunities clause of Article IV of the U.S. Constitution protects the rights of citizens in each respective state when traveling to another.
Recently, states have started passing laws that allow electronic versions of proof of insurance to be accepted by the authorities.
In some states, you must purchase Personal Injury Protection which covers medical bills, time lost at work, and many other things.
Generally, liability coverage purchased through a private insurer extends to rental cars.
"Full coverage" is a layman's misnomer that often results in drivers and vehicle owners being woefully underinsured.
Minimum deductibles and liability limits (required by some leasing companies) would be outlined in the loan contract.
Failure to carry the required coverages may lead to the lienholder purchasing insurance and adding the cost to the monthly payments or repossession of the vehicle.
Vehicles purchased with cash or paid off by the owner are generally required to only carry liability.
Additionally, a few insurance companies list "Acts of God" as an aspect of comprehensive coverage, although this is an old term that is not ordinarily used today.
Some states maintain unsatisfied judgment funds to provide compensation to those who cannot collect damages from uninsured driver.
[12] Typically, the payout is not more than the minimum liability limits and the negligent driver remains responsible for reimbursing the state's fund.
Thus, if the vehicle is damaged beyond economical repair at this point, the owner will still owe potentially thousands of dollars on the loan.
The escalating price of cars, longer-term auto loans, and the increasing popularity of leasing gave birth to GAP protection.
Failure to understand this can result in the lender continuing their legal remedies to collect the balance and the potential of damaged credit.
This means that the monthly price quoted by the dealer must include GAP insurance, whether it is delineated or not.
Nevertheless, unscrupulous dealers sometimes prey on unsuspecting individuals by offering them GAP insurance at an additional price, on top of the monthly payment, without mentioning the State's requirements.
In addition, some vendors and insurance companies offer what is called "Total Loss Coverage."
This had left a gap in coverage for tows that are related to mechanical breakdowns, flat tires and gas outages.
Personal items in a vehicle that are damaged due to an accident typically are not covered under the auto insurance policy.
[citation needed] Insurers use actuarial science to determine the rates, which involves statistical analysis of the various characteristics of drivers.
Penalties for not purchasing insurance vary by state, but often include a substantial fine, license and/or registration suspension or revocation, and possible jail time.
California and New Jersey have enacted "Personal Responsibility Acts" which put further pressure on all drivers to carry liability insurance by preventing uninsured drivers from recovering non economic damages (e.g. compensation for "pain and suffering") if they are injured in any way while operating a motor vehicle.
North Carolina is the only state to require that a driver hold liability insurance before a license can be issued.
Arizona Department of Transportation Research Project Manager John Semmens has recommended that car insurers issue license plates and be held responsible for the full cost of injuries and property damage caused by their licensees under the Disneyland model.
[21] As automotive collisions increased in frequency, it became clear that, unlike other torts, which relied on personal responsibility, there was a possibility that automobiles would need to be governed by laws because "[t]here was no way of assuring that even though fault was assessed the victim of an automobile collision would be able to collect from the tortfeasor.
"[21] This led Massachusetts and Connecticut to create the first financial responsibility and compulsory insurance laws.
Connecticut's 1925 financial responsibility law required any vehicle owner involved in a collision with damages over $100 to prove "financial responsibility to satisfy any claim for damages, by reason of personal injury, to, or death of, any person, of at least $10,000.
North Carolina followed suit in 1957 and then in the 1960s and 1970s numerous other states passed similar compulsory insurance laws.
There are various ways that this is accomplished, with the most common being an assigned risk plan[42] and other programs including joint underwriting associations, reinsurance facilities, and in the case of Maryland a state-owned fund subsidized by insurers.
