Financial Responsibility Laws: A Definition
Those who are unfamiliar with some of the legal aspects of the auto world might not know how to define financial responsibility laws. Knowing more about this legal standard can help consumers and households avoid some potential liability situations.
What Are Financial Responsibility Laws?
In the general legal sense, a financial responsibility law is designed to ensure that someone who causes a financial liability has the capacity to compensate individuals who may have lost money or value. Specific financial responsibility laws are often like consumer or public protections, where through insurance or other systems, the government makes sure that someone injured or otherwise negatively impacted can get compensated.
Financial Responsibility Laws in the Auto Insurance World
In terms of driving, financial responsibility laws are created to guarantee that someone who causes an accident has arranged for covering the expenses of their behavior. Because collisions and traffic accidents are very "high value", it's unlikely that most individuals can afford to pay for damage out of their own finances. That's why the financial responsibility laws basically require drivers to keep insurance that will pay victims in the case of an accident.
Minimum Liability Insurance
Financial responsibility laws for drivers require them to buy a specific minimum amount of insurance in a liability insurance package that varies by state. Each state has its own insurance requirement and procedures for drivers to operate vehicles legally as a registered driver in that state. Non-compliance can come with high costs in the form of fines and even imprisonment.
Consider the above for making sure you are legally on the road in your state.