What am I required to do under the financial responsibility law?


Every state has introduced its own financial responsibility law requiring drivers to provide evidence of financial responsibility in the event of an accident, or any road violation. Alternatively, some states have enacted their own mandatory insurance law under which all motorists are required to carry liability auto insurance of at least a minimum amount specified by state law.

Characteristics of the Financial Responsibility Law

Under the financial responsibility law, a motorist's driving license can be suspended by the state if the motorist does not furnish any proof of financial responsibility. This does not mean that drivers have to provide such evidence at the beginning of their driving career. Here is a list of the circumstances in which proof of financial responsibility is demanded:

  • If a driver is found to be at fault for an accident and causes physical damage and injuries exceeding a certain amount;
  • If a motorist is convicted of road violations and offences such as driving under the influence of alcohol or drugs, or driving negligently;
  • If an at-fault driver fails to pay a car accident compensation ruled out by court.

How to Provide Evidence of Financial Responsibility

Fortunately for drivers, there is a variety of ways to do that.

The most common way is by showing that they have a liability coverage automobile insurance with certain limits, such as the formula 15/30/15, where the first figure stands for bodily injury liability limits per person in an accident, the second one - for injury liability per accident, regardless of the number of injured, and the third one - for property damage (in thousands of dollars).

Another less common but possible option of meeting the financial responsibility law requirements is through bonds and deposits.

Flaws of the Financial Responsibility Laws

Although they are aimed at protecting drivers from uninsured and negligent motorists, financial responsibility laws sometimes fail to adequately indemnify the victims of a car accident. This is so because of the low liability limits imposed by most states. If a driver is underinsured, the injured person might not get adequate compensation.

Another major problem motorists face is the existence of hit-and-run drivers, drivers with no license or no car insurance - a problem states have been trying to heal, but without much success.

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