Car Insurance Laws

Every state has its own car insurance laws, so just because you know what’s required of you in one state doesn’t mean you have what you need if you move to another state. When thinking about procedures for handling claims following accidents, there are basically three different ways the states handle this. These methods are:

• Tort • No-fault • Add-on

If you live in a state that uses the tort method, this means that if you are involved in a car accident, the person who caused the accident (the person considered to be “at fault”) can be sued by the other person for losses or damages. Every state that uses the tort process in its car insurance laws has its own variations on how this works.

Contrast that with the no-fault states. Your insurance company will pay for your losses and damages, and the other person’s company will pay for his. But your company will only pay up to the limits set in your policy. You can’t file a lawsuit against the other person in an attempt to put the blame and the financial responsibility on them, so that they pay for damages above what your insurance policy covers. That’s right, even if they were at fault. But no one can sue you either.

Your insurance company, however, can go after the other person’s insurance company if they believe that the other driver was at fault. If the other company agrees, it will compensate your company for what they paid you. If you live in one of the add-on states, then what happens is basically a combination of tort and no-fault. If you are involved in an accident, your insurance company pays you for the losses you incurred, whether these involve repairs to your car or medical bills for treatment of injuries you got from the accident. But there are no legal restrictions preventing you from filing a lawsuit.

Other car insurance laws concentrate on how much insurance you need. Each state has its own minimum requirement. Generally they specify how much coverage you need in case you cause bodily injury to another person, the total amount for bodily injuries for every person involved in the accident, and the amount you need to pay for property damage.

The most common time people run afoul of these laws is when they move to another state. With everything they have to do related to their move, they don’t think about their car insurance. Add to your moving checklist a call to your insurance agent to make sure your current policy will meet your new state’s requirements. The last thing you want to happen when you move to a new state is be fined for breaking its car insurance laws.