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How is New Hampshire the Only State Not Requiring Auto Insurance?

By Aaron Crowe

Seal_of_New_HampshireAs a lifelong resident of New Hampshire, Monique Prince is proud of the fact that she lives in the only state in the country that doesn’t require auto insurance.

“We come from a state where we should have our own freedom,” says Prince, 48, a clinical social worker who lives in Chester, N.H.

That freedom aside as the only non-compulsory auto insurance liability state, she has liability insurance anyway, paying about $500 per year to protect her in case she’s at fault in an auto accident. So far Prince hasn’t had to use the insurance, which wouldn’t cover damage to her car but would cover the other driver’s car if she caused an accident.

While New Hampshire law doesn’t require liability insurance, it does require that drivers prove they have enough money in an “at-fault” accident, which they can do by buying a bond or some other way to prove financial responsibility. Also, people who have been in previous crashes, have a DUI or other conviction may be required to have insurance.

“Why should I pay for that if I’m a good driver and I don’t get in an accident?” Prince asks.

To cover herself financially if she gets in an accident with an uninsured motorist and needs to pay to have her car fixed, Prince has an emergency fund to pay for car repairs and her liability insurance. Liability insurance pays the other driver’s medical, vehicle repair and other costs when the policyholder is at fault.

She has been hit once by another driver, and her first thought wasn’t about if anyone was injured: “This ‘blank’ better be insured,” she says of her initial reaction after being hit. The other driver turned out to be insured, Prince says.

Low rate of uninsured drivers in N.H.

That fear of being hit by an uninsured driver may be what convinces Prince and other New Hampshire residents to buy auto insurance anyway.

A 2012 claims study by the Insurance Research Council found that 9.3 percent of New Hampshire drivers were uninsured, ranking the state 34th in percentage of uninsured drivers. Oklahoma was the worst, topping the list with 25.9 percent of its drivers being uninsured. Nationwide, 12.6 percent of motorists are uninsured.

Compulsory auto liability insurance isn’t necessarily the most effective solution to getting more drivers insured. A 1994 study by the National Association of Independent Insurers found that New Hampshire had a smaller percentage of uninsured drivers than the nearby states of Rhode Island, Vermont and Connecticut.

“The lack of a mandatory insurance law doesn’t drive up the number of uninsured motorists” in New Hampshire, says Robert Passmore, assistant vice president of the personal lines policy at the Property Casualty Insurers Association of America.

What if hit by uninsured driver?

New Hampshire drivers who do buy auto insurance will want to have uninsured motorist coverage, says Larry Crowe, public information officer for the New Hampshire DMV.

“They’re pretty much on their own” if they’re hit and don’t have insurance, Crowe says.

If someone is in an accident and police don’t respond, and the combined damages were more than $1,000 or someone was injured, then a report must be filed with the DMV. If someone was driving your vehicle and was involved in a crash, then they would have to complete the accident report.

If an uninsured driver is at fault in an accident that causes $1,000 or more in combined damages or someone is injured, the state can suspend the uninsured driver’s license and registration privileges.

After the accident, those drivers will be required by the state to have insurance through what’s commonly called an SR-22 for at least three years after the accident, according to the DMV. It’s a form they can pay an insurance provider for, proving they have insurance.

Some convictions also require an SR-22, including driving while intoxicated, underage DWI, leaving the scene of an accident and a second offense for reckless operation.

Uninsured drivers who live in New Hampshire and are in a car crash can have their driving privileges suspended. If they can’t agree with the other party, they can post restitution with the DMV by sending in cash or a check, or by allowing the DMV to withdraw the amount from their savings account.

This payment is different from the proof of financial responsibility required by all drivers in the state, even if they don’t have liability insurance. They must show proof of $25,000 in bodily injury or death to one person, $50,000 for two or more people in an accident, and $25,000 for property damage.

Law seems to be working

New Hampshire has had this law for as long as anyone at the DMV can remember, Crowe says.

“Everything seems to be working OK, so why create the law” requiring insurance, he says.

The law also covers out-of-state drivers who cause accidents. For an uninsured driver who lives outside of the state and causes an accident in New Hampshire, their privilege to drive in New Hampshire will be suspended and their home state will be notified of the suspension.

For Prince, the state resident who considers herself an excellent driver, the law works — though she’s not sure about out-of-state drivers who may or may not be insured.

“If I see a Massachusetts license plate, I stay away from them,” Prince says. She wasn’t joking.