Auto Insurance Laws (2025)

Everyone in the United States who owns any type of motor vehicle licensed for street use in almost every state must, by law, carry some form of auto insurance.

It has become common knowledge that car insurance is required by law, but what other factors affect auto insurance rates that owners and drivers need to know about auto insurance and state laws?

Cars and trucks are carried under auto policies, while motorcycles require a separate, specialized policy. Regardless of whether you are driving a car, truck, or motorcycle, there are very similar auto insurance laws.

Read through this list of automobile insurance laws, and then to find the very best auto insurance rates be sure to enter your zip code at the top of this page for free auto insurance quotes!

Components of an Auto Insurance Policy

State Insurance Commissioners require by state auto insurance law that each and every insurance policy is comprised of some basic options.

Some insurance companies will offer extras such as roadside assistance coverage or pet injury coverage, but there are common elements available from all companies that can include some or all of the following:

Liability Insurance

Liability auto insurance pays for any property damage or bodily injury that a driver may cause to another party. This covers damage to other cars and their occupants as well as roadside street signs or pedestrians. It also covers passengers in the driver’s car, but it does not cover the driver or the driver’s car.

Collision Insurance

Collision auto insurance covers the driver’s car in the event he or she causes an accident and damages their own car. Collision insurance is normally associated with a deductible that is paid out of pocket before the insurance company pays the remainder of the tab.

Comprehensive Insurance

Comprehensive auto insurance covers the car for any damage that is not a collision. Damage such as hail, theft, or vandalism would be covered under comprehensive. Comprehensive is also typically sold with a deductible.

Uninsured/Underinsured Motorist Insurance (UM/UIM) 

Uninsured motorist coverage is similar to liability coverage; however, it covers the policyholder rather than other parties. If a policyholder is involved in an accident caused by a driver who does not have any insurance or does not have enough insurance to cover the damages, then uninsured/underinsured motorist coverage would activate to cover the policyholder’s medical and property damage expenses.

In the event your insurance company pays UM/UIM to their insured on behalf of the driver with no insurance, it will be up to the insurance company’s discretion if they will sue the other driver for the damages they were liable for but uninsured or underinsured to pay.

Personal Injury Protection Insurance (PIP)

Personal injury protection auto insurance pays the driver and any passengers up to a specified limit for medical bills and death expenses as well as loss of income resulting from the injuries, among other things. This coverage pays out regardless of who is at fault for the accident.

Rental Car Reimbursement Coverage

Rental car reimbursement coverage would pay for the use of a rental car when the insured vehicle is unusable due to a comprehensive or collision claim. If another driver hits the policyholder, the other party’s insurance would pay the cost of the rental car.

Gap Coverage

If your vehicle is leased or financed and you owe more than your car is worth, gap insurance will pay over and above the value of the vehicle to cover the amount you owe. Some gap policies will pay any amount you owe. Some are capped at a certain amount based on the car’s value.

Specialized Motorcycle Insurance Laws

In addition to the general coverages listed above, motorcycle policies also have one major difference. In most parts of the country, motorcycles cannot be driven all year long, so policies have a lay-up option.

This option allows the driver to be covered and pay for only the part of the year that the motorcycle is usable. For example, your policy may only offer coverage from May 1 to September 30.

Choosing the lay-up option will lower your premium; however, even if there’s a beautiful day in April, you are not insured to drive the bike.

This option allows the driver to be covered and pay for only the part of the year that the motorcycle is usable.

Minimum Auto Insurance Requirements

There are two types of insurance requirements: minimum liability coverage established by the state and if your vehicle is leased or financed, the full coverage auto insurance requirements of your loan or leasing company.

Auto Insurance Laws by State

Every state has a minimum liability coverage requirement. Your state’s laws will dictate the liability limits you must carry on all vehicles you own.

For example, New York’s minimum liability requirement is 25/50/10. This means that every New Yorker must insure their car with liability that covers up to $25,000 in bodily injury liability coverage per person at a total of $50,000 per accident and up to $10,000 in property damage liability.

Here’s how it works: There are three people in a car worth $15,000, and you hit that car while carrying state minimum liability insurance. You cause $10,000 in medical bills per person, and their vehicle is totaled.

Your bodily injury liability would be $30,000, and you are fully covered. You caused $15,000 in property damage but only have $10,000 in coverage.

If the driver of the car you hit had underinsured motorist coverage, that would pay the remaining $5,000; however, since you are still the liable party in the accident, their insurance company may choose to sue you for the additional $5,000 they paid on your behalf.

Bank/Loan Minimums

Since they own the car, they will require you to carry collision and comprehensive coverage to ensure that the car they own is covered by insurance, and they would be reimbursed should the car be totaled.

Proof of Insurance

Since you are required to carry coverage on your car, you may be asked to prove it at any time. Every insurance company will provide you with an insurance card to keep in your wallet or with the car.

It will reflect the name of the insurance company, the car that is covered, as well as the policy’s effective dates.

If you are pulled over for a traffic violation or registering your car, you will probably be asked to show your insurance ID card.

If you are found guilty of being uninsured, you could face a fine or driver’s license suspension.

Failing to produce proof of insurance upon request can result in a citation or even arrest.

Read more: How to Get Instant Auto Insurance Proof

SR-22 Filing

SR-22 auto insurance is assigned by the court system to people who have had serious and often repeated auto-related violations in the past, such as drunk driving or driving without insurance.

The state, in turn, gets immediate notification of a person’s insurance status and can issue an arrest warrant or fine if someone is in violation of their filing.

If a driver is required to carry an SR-22, they must notify their insurance company immediately.

With this filing placed on their policy, the insurance company will be in contact with the state every time the policy is renewed or canceled.

Tort States/No-Fault States

Most states follow the standard at-fault/not-at-fault accident system. When an accident happens, one driver will be deemed to have caused the accident (at fault), and one driver will be deemed not at fault.

The at-fault driver would cover the accident through their liability coverage, paying the other driver’s expenses, and with collision coverage and personal injury protection, they would pay their own expenses

In order to lower the costs of attorneys and lawsuits, some states have adopted tort systems or no-fault systems.

In a tort state, such as Pennsylvania, policyholders can opt to lower their insurance premiums by choosing “limited tort.” Carrying full tort, a policyholder can file a lawsuit for personal injury resulting from a car accident for any reason.

By choosing limited tort, a policyholder is limiting their ability to sue for any additional settlement, with the exception of very serious circumstances.

Carrying full tort, a policyholder can file a lawsuit for personal injury resulting from a car accident for any reason.

In a no-fault insurance state, each party carries insurance to cover their own expenses should an accident occur.

Aside from reduced litigation costs, this type of policy also allows for quick payment of settlements because there is no haggling over who pays.

Car Seat Laws

Car seat laws are regulations that govern the use of child safety seats and booster seats in vehicles. These laws typically specify the age, weight, and height of children who must use these seats, as well as the types of seats that are appropriate for different stages of a child’s development.

Car seat laws may also require that children be seated in the back seat of a vehicle and that the seats be installed and used correctly according to the manufacturer’s instructions. The purpose of these laws is to help protect children in the event of a car accident by ensuring that they are properly restrained and positioned in the vehicle.

Car seat laws generally do not have a direct impact on your car insurance premiums. However, if you are found to be in violation of car seat laws and are issued a citation, this could result in points on your driving record or fines, which could in turn lead to higher insurance rates.

Additionally, if you are involved in an accident and it is determined that you were not in compliance with car seat laws, this could impact your liability and potentially result in higher insurance premiums. It is important to always follow car seat laws and ensure that your children are properly restrained in your vehicle to protect their safety and potentially avoid any legal or insurance-related consequences.

Select your state from the list below in order to learn more about child car seat requirements in your state.

Follow Driving Laws

Traffic violations can have a significant impact on your auto insurance coverage and rates. Insurance companies view drivers with a history of traffic violations as higher risk and may raise their rates or even cancel their coverage. This is because these violations indicate a higher likelihood of accidents, which can lead to insurance claims and increased costs for the insurer.

Depending on the severity and frequency of the violations, you may also be considered a high-risk driver, which can make it more difficult to find affordable insurance coverage. It’s important to follow traffic laws and drive safely to avoid violations and maintain your insurance coverage at an affordable rate.

Read more: Does a criminal record affect auto insurance rates?

Each of these infractions can result in points on your driving record and may cause your insurance rates to increase. Some violations, such as DUI/DWI convictions or hit-and-run accidents, may even result in your insurance company canceling your coverage altogether. It’s important to drive safely and follow traffic laws to avoid these infractions and maintain affordable auto insurance coverage.

Auto Insurance Rate Factors

What do insurance companies look for in drivers? Auto insurance rates are factored by basic information, including:

• The drivers on the policy, their genders, ages, marital statuses, and driving records
• The value and safety records of the vehicles on the policy
• The policy owner’s credit score
• The usage and distance of the vehicles driven

State laws and coverages vary widely. For specific information about minimum auto insurance requirements by state, visit your state’s Department of Motor Vehicles website.

Understanding Auto Insurance Laws and Regulations

In the context of understanding the intricacies of auto insurance, several important phrases and terms arise frequently. For instance, California auto insurance laws and regulations as well as California minimum insurance requirements are critical for drivers in California to comprehend. Additionally, for those looking into specific insurance companies, knowing about direct auto insurance upcoming trends is beneficial. A common question is do states dictate a driver’s minimum required amount of insurance, laid up motorcycle insurance, and indeed, states dictate a drivers minimum required amount of insurance in various ways.

Motorcycle enthusiasts should be aware of laid up motorcycle insurance, a specialized form of coverage. Understanding minimum car insurance requirements by state is crucial for compliance and financial protection. Recent changes have highlighted new California car insurance law which reflect the evolving legislative landscape. Similarly, new car insurance law are terms that signify broader changes affecting all drivers.

In Oregon, knowing the Oregon car insurance law and Oregon minimum car insurance requirements is essential for compliance. Oregon car insurance laws mandate minimum liability coverage for bodily injury and property damage, as well as uninsured motorist coverage and personal injury protection, to ensure adequate financial protection for drivers and accident victims.

Similarly, Pennsylvania auto insurance laws and regulations dictate the minimum coverage for drivers in Pennsylvania. On a broader scale, U.S. car insurance law encompasses federal and state regulations.

Virginia has introduced a new car insurance law, impacting local drivers. A unique situation arises in Ohio, prompting the question, what is the exception to the law requiring auto liability insurance in Ohio? This points to specific legal nuances in the state. Generally, knowing what type of auto insurance is required by law in most states and which type of auto insurance is required by law in most states helps drivers understand their obligations.

If you want to compare cheap auto insurance rates from competing companies to save money then just enter your zip code right now in our free comparison tool below!

Other Frequently Asked Questions about Car Insurance and Laws

Navigating the world of car insurance can be complex, with various laws and regulations differing by state. This FAQ section addresses some of the most common questions about car insurance requirements and policies in the United States, providing clear and concise answers to help you understand your obligations and options.

• What states is it illegal to not have car insurance? In almost every state, it is illegal to drive without car insurance. States that require drivers to have car insurance ensure that drivers can cover damages in case of an accident. New Hampshire and Virginia are exceptions; however, these states have strict financial responsibility laws that drivers must follow if they opt out of purchasing car insurance.
• Is car insurance mandatory by law in most states? Yes, car insurance is mandatory by law in most states. Nearly all states require drivers to carry a minimum level of liability insurance to cover damages or injuries they may cause in an accident.
• What is the new law in Virginia about car insurance? The new law in Virginia regarding car insurance requires uninsured drivers to pay a fee if they choose not to carry insurance. This fee does not provide any insurance coverage but allows them to drive legally without insurance.
• Is car insurance a federal law? No, car insurance is not mandated by federal law. Car insurance requirements are determined by state laws, which means each state sets its own minimum coverage requirements and regulations.
• What is the 15/30/5 rule? The 15/30/5 rule refers to the minimum liability insurance coverage limits required in some states: $15,000 for injury or death of one person, $30,000 for injury or death of more than one person, and $5,000 for property damage.
• Can you go to jail for driving without insurance in Texas? Yes, in Texas, driving without insurance can lead to serious penalties, including fines, vehicle impoundment, and even jail time, especially if the driver is involved in an accident without insurance.
• Is car insurance a legal requirement in the USA? Yes, car insurance is a legal requirement in the USA, with each state setting its own minimum insurance requirements. Failure to comply with these laws can result in fines, license suspension, and other penalties.
• Is car insurance constitutional? Yes, car insurance requirements are constitutional. The mandate for drivers to carry insurance is a legal regulation set by individual states to ensure that drivers can cover potential damages or injuries they may cause.
• What is the purpose of an umbrella policy? An umbrella policy provides additional liability coverage beyond the limits of a standard auto or homeowners insurance policy. It offers extra protection against major claims and lawsuits, ensuring greater financial security.
• Do insurance companies go after uninsured drivers in Virginia? Yes, in Virginia, if an insured driver is involved in an accident with an uninsured driver, the insurance company may pursue the uninsured driver for damages through subrogation.
• Does Virginia allow drivers to drive uninsured? Yes, Virginia allows drivers to drive uninsured if they pay an Uninsured Motor Vehicle (UMV) fee. This fee does not provide insurance coverage but permits legal driving without insurance.
• Is Virginia a no-fault state for auto? No, Virginia is not a no-fault state. It follows a traditional fault-based system where the driver who is found to be at fault for an accident is responsible for paying for damages.
• What are the three limits of insurance policies? The three limits of insurance policies typically refer to bodily injury per person, bodily injury per accident, and property damage. These limits define the maximum amount the insurance company will pay in each category.
• What are the three types of car insurance? The three main types of car insurance are liability insurance, collision insurance, and comprehensive insurance. Liability insurance covers damages to others; collision insurance covers damages to your own vehicle in an accident; and comprehensive insurance covers damages to your vehicle from non-collision events such as theft, fire, or natural disasters.
• Can you drive someone else’s car in America? Yes, you can drive someone else’s car in America as long as you have the owner’s permission and are covered under their insurance policy or have your own insurance that extends coverage to other vehicles you drive.

Understanding the intricacies of car insurance laws and requirements can help you stay compliant and protected on the road. Whether you’re navigating state-specific regulations or exploring different types of coverage, being informed is key to making the best decisions for your insurance needs.