Short answer: Most states require drivers to have liability coverage to protect others from financial harm and to ensure responsible payment for damages or injuries caused by accidents. Details:
- Core purpose: Liability insurance ensures that when a driver is at fault in an accident, the victims can be compensated for medical bills, vehicle repairs, lost wages, and other damages without needing to sue individuals for large sums or rely on the at-fault driver’s personal assets. This spreads the financial risk across society and the insurance system rather than leaving accident victims uncompensated.
- Public policy rationale: Requiring insurance helps reduce uninsured losses and promotes public safety by ensuring funds are available to cover costs arising from motor vehicle incidents, which are common and potentially catastrophic. It also discourages driving without means to pay for damages, which could shift financial burdens to hospitals, public programs, or innocent third parties.
- Legal and practical effects: States set minimum coverage levels (bodily injury and property damage per accident) that drivers must carry to operate a vehicle legally. In nearly all states, proof of insurance is required for registration, licensing, or vehicle operation. Where insurance isn’t mandated (e.g., New Hampshire), drivers must demonstrate financial responsibility if they cause an accident.
- Social and market considerations: A private insurance market exists to pool risk and provide predictable, affordable coverage. Mandating liability coverage reduces the likelihood of large, uncompensated losses and helps stabilize costs for all drivers by distributing risk across many insured individuals rather than placing it on accident victims or public funds.
If you’d like, I can break down how minimum liability limits are determined in your state, compare states with and without personal financial responsibility requirements, or summarize common objections and responses to mandatory insurance policies.
