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Understanding Financial Responsibility Law

When shopping for car insurance, it is essential that motorists understand the terms of the Financial Responsibility Law. Drivers must understand that obtaining a car insurance policy is crucial, not only for their own protection, but for compliance with state law.

The Financial Responsibility Law was originally created to protect drivers involved in an automobile accident. When a collision occurs, there are often physical injuries sustained by the drivers and there can be significant damage to the automobiles involved. The Financial Responsibility Law requires drivers to prove financial ability to pay for damages incurred in a collision or when issued a traffic citation. All drivers must be financially responsible for their actions. The most common way to comply with financial responsibility law is to maintain current car insurance coverage. Drivers with current car insurance policies should carry their proof of insurance in their vehicles at all times. When involved in an accident, or pulled over by law enforcement, drivers can then easily locate their proof of insurance and comply with financial responsibility law. The requirement to present proof of car insurance coverage is not based on who was at fault in the accident. Under the Financial Responsibility Law, all parties must present proof of financial ability to pay for damages.

Failure to present proof of car insurance coverage can result in being issued a citation or worse. If one has coverage and simply does not have proof on his or her person, then he or she must mail in proof by a court appointed date to avoid further consequences. If one does not have a current car insurance policy, he or she is in violation of Financial Responsibility Law. Failing to present proof of coverage to law enforcement at the scene of an accident or when pulled over can result in suspension of one's driver's license. Financial Responsibility Law does not require drivers to present proof of insurance to obtain a driver's license or vehicle registration.

Under the Financial Responsibility Law, all parties must present proof of financial ability to pay for damages. Every state has a financial responsibility law that requires a minimum amount of liability coverage. To learn what the minimum requirement for coverage is in your state, check the Department of Motor Vehicles' state web site. It is recommended that drivers purchase more than the state minimum requirement for coverage to protect them adequately. Many car insurance policies include uninsured motorist protection and many states require an uninsured motorist clause in their minimum requirement for compliance with the Financial Responsibility Law. If the policy holder is involved in an accident with an uninsured motorist, the policy holder is afforded some financial protection under his or her own policy.

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