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Financial Responsibility As Opposed To Insurance

Believe it or not there are some states that do not require you to have car insurance, although all states do have financial responsibility laws. There are plenty of bad drivers out there who actually drive around with no insurance illegally. This is one of the reasons for uninsured motorist’s coverage, but there are plenty of drivers who don’t carry insurance and it’s legal.

As opposed to having insurance some states allow drivers to prove they can pay if responsible for an accident, meaning, prove financial responsibility. Proving financial responsibility is a pretty cumbersome task. To prove responsibility some states require the issuance of a surety bond. The absurdity of purchasing a bond as opposed to a typical insurance policy is that the bond can cost more! A bond can cost 4% or more of the liability amount that you are purchasing as a bond, so $35,000 limit, $1,400 cost, just for liability. Thus a bond is typically not more economically feasible than an insurance policy. Some states also allow large cash deposits as opposed to surety bonds or an insurance policy. Depositing as much as $50,000 with the applicable state to prove you can pay if in an at fault accident. This way your money is tied up at a low interest rate and untouchable.

Several states allow for proof of financial responsibility as opposed to carrying typical automobile insurance. Some notable states that allow for proof of financial responsibility as opposed to insurance are California, Ohio, Tennessee, Texas and Washington, each state still has their cumbersome financial responsibility requirements, such as bonds or deposits with the appropriate state’s treasurer. The most unique state for actually not having to carry any insurance is New Hampshire.  As long as a driver’s record is clean, they do not have to carry insurance, or prove financial responsibility. However, once a certain number of points are on a driver’s record, or they are convicted of a driving while intoxicated charge, they are required to purchase a minimum liability limit. Next time you are in New Hampshire and you see a no helmet motorcycle rider, just think not only are they risking their lives they may not even have insurance, truly Live Free or Die, per the state motto.

Driving without insurance is a nonsensical gamble, with no high-risk high reward scenario, it’s all risk. An individual could lose all their assets if found at fault in a serious accident, with no insurance to protect them. Even if the accident appears to not be the uninsured driver’s fault, court costs alone to defend one’s self could be in the thousands. With several options and competitive markets for insurance, as well as affordable and convenient payment plans, there is no reason to not be insured. If you can afford to drive you can afford insurance.      

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