Auto Insurance Laws

In United States, auto insurance is a state subject and every state has its own law governing the need, type and amount of auto insurance. In most of the states it is mandatory for the auto driver to carry a minimum auto insurance coverage while states like Virginia, do not require it mandatorily. However, an uninsured fee should be paid to the government in case the auto driver chose not to carry the auto insurance. The privileges and immunity clause of article IV of US constitution protects the citizens and auto drivers when commuting from one state to another.

There are different kinds of auto insurance coverage available in the United States as given below:

  • Liability coverage is provided by the insurance company for bodily injuries as well as property damage. The insured can opt for only one of this clause(split) or both (combined). The claim for property damage can be limited only to the immediate damaged property or can even be extended to financial loss incurred due to the damaged property not available for use. This again depends on the jurisdiction of the state.

  • Bodily injury liability is divided into two parts- maximum payment per person and maximum payment per accident. Every state has a minimum coverage stipulated for payment per person, payment per accident and property damage usually separated by slashes. Eg: 15/30/5, meaning USD 15000 for payment per person, USD 30000 for maximum payment per accident on account of bodily injuries and USD 5000 for property damage. An individual has an option to go for higher amount of insurance than as stipulated by the state.

  • Rental Coverage is provided to cover the car rental charges in case your personal vehicle is damaged and you are forced to use a rental car for few days. The term is also used to mean insurance coverage extended to the rental cars.

  • Collision Coverage is a term used to define the insurance coverage for vehicles involved in collision only. Comprehensive coverage provides for loss other than collision like theft or fire.

  • There are also other types of insurance coverage like loss of use, towing coverage etc.

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