Car Insurance and the Law

If you drive a car, insurance probably isn't an option. The government and your lender require financial protection for their best interest and yours—and for other drivers' physical protection. Having car insurance also benefits you by providing peace of mind when you're on the road, no matter where you go.

But before you pick a policy and sign on the dotted line, find out what's required by law in your state. This will help you avoid spending money on coverage you really don't need—and help make sure you drive sensibly and legally.

The Legalities of Driving

To make sure you have the coverage you need, use these simple pointers as a guide when considering a car insurance purchase.

1. You must either carry car insurance or prove financial responsibility.

Though car insurance isn’t compulsory in every state, those that don't require it do require proof of financial sufficiency to cover liability in case of an accident. Since property damage and injury expense can accumulate into the tens of thousands of dollars and up, most people choose to purchase liability coverage to cover their own legal obligation behind the wheel.

2. Each state sets its own ceiling on car insurance rates.

Insurance companies must follow government regulations by keeping rates below a certain level—a limit set and enforced state by state. If you think your insurance company might be illegally charging high car insurance rates, or you'd like more information on how rates are set, talk to your insurer or contact your state department of insurance now.

3. Your insurance company has the right to cancel your policy.

If you fail to follow the guidelines set forth in your insurance policy, your insurance company is not legally bound to keep insuring you. For example, if you neglect to pay your premium or you lose your driver’s license, it can legally cancel your policy.

If, at any time during the application process, you aren't completely honest and up-front, this gives your insurer reason for canceling your policy, as well as cancelling any claims you currently have in process. If you don't disclose facts about your lifestyle, personal history, or the type of vehicle you drive which might affect your risk level, your policy may become null and void as well.

Otherwise, your state legally requires your insurance company to fulfill its contract with you. However, come renewal time, it can non-renew you if it finds your driving record makes you a bad risk.

4. You must only carry third party coverage.

The law obligates you only for enough financial backing to cover other drivers and their vehicles. Coverages for you, your car and your belongings are not legally necessary. Because of this, you may not need more comprehensive coverages, such as collision or comprehensive, added to your auto insurance policy. Take this into consideration before buying a policy, as you could save yourself a considerable sum of money by doing so.

Getting behind the wheel of a car is a responsibility you should never take lightly. So get informed on your state's insurance laws; talk to a qualified auto insurance agent or your state department of insurance to get your questions answered, and let GIQ help you find cheap car insurance today!