Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jul 14, 2021

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Here's what you need to know...

  • The laws have gone into effect at different times, and they continue to change from one year to the next as states adjust their minimum requirements
  • The goal is to reduce the overall number of uninsured motorists
  • No-Fault states may require personal injury protection
  • The laws in no-fault states vary from other areas, and you should understand your rights and responsibilities

In 1897, an Ohio resident purchased an insurance policy. It was written for his horse and carriage and extended to include his automobile and would cover damages to another person’s property or their injuries.

The early years of auto insurance focused on the liability end, but this changed in 1902 when a fire and theft policy was written, which was the first time that insurance would pay for damage to the owner’s private vehicle.

In 1912, history was made again with the first multi-line policy, which combined liability, property, and fire coverage into one account. It would become the template for future policies.

In 1927, Massachusetts became the first state to have a mandatory insurance requirement. The objective was to keep all drivers financially responsible for accidents on the road, and the concept soon spread to other states.

Make sure you have the coverage required by your state by entering your zip code into our FREE comparison tool above!

Understanding Compulsory Auto Insurance


Currently, most states require drivers to carry some level of liability insurance. The laws have gone into effect at different times, and they continue to change from one year to the next as states adjust their minimum requirements.

In addition to the liability requirements, no-fault states may also demand additional types of protection for drivers.

Compulsory auto insurance is required in almost every state, with New Hampshire being the lone exception. This liability insurance is in place to pay for the damages to another parties property or their medical bills if you cause an accident.

Each state has different liability limits based on what legislators believe is appropriate. In general, the public supports mandatory insurance laws as a way to protect all drivers on the road from financial losses.

Many states use electronic insurance verification methods to compare insurance rosters with registered vehicles. This system allows them to identify quickly people who may be driving without insurance and take action.

The goal has been to reduce the overall number of uninsured motorists, but research shows that the mandatory coverage laws are not necessarily achieving that goal.

It’s estimated that 13 percent of drivers on the road currently are uninsured, but that number has dropped slightly in recent years.

If you’ve been avoiding getting insurance due to the perceived high cost, you’ll be relieved to know that it’s possible to lower your rate by shopping around with different companies.

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Challenged in Court

In some states, like California, the mandatory insurance laws have been legally challenged and upheld by the courts.

The chief complaint was that the law required low-income drivers to carry insurance without guaranteeing that they would be able to afford the rates.

However, the court noted that there are state-backed assigned risk programs that were available to all drivers and were more affordable than ordinary insurance.

The California law went into effect in 1984, and it was upheld by the State Supreme Court in 1987.

Changing Requirements


States can also change the laws and increase their minimum insurance levels. One recent example is Ohio, where the law changed for the first time in 44 years.

Previously, Ohio had the second lowest limits in the nation, but as of March 2013, Ohio drivers must carry:

  • $25,000 per-person injury protection
  • $50,000 injury protection per accident
  • $25,000 in liability insurance

Drivers were given a nine-month grace period to correct their coverage levels, so people had time to find the right plan and work the new premium into their budgets. This change put Ohio in line with the rest of the country.

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The No-Fault States and Personal Injury Protection

Several states operate under a platform, including Florida, Michigan, New Jersey, New York, Kansas, Kentucky, Minnesota, North Dakota, Hawaii, Massachusetts, Pennsylvania and Utah.

This coverage is designed to handle your own medical expenses in the event of an accident, regardless of fault. It includes:

  • Coverage for you and your passengers
  • Payments for medical and rehabilitation expenses
  • Work loss benefits

The laws in no-fault states vary from other areas, and you should understand your rights and responsibilities.

When you shop around for auto insurance, ask if you have all the necessary protections for driving in these states.

Driving is considered a privilege, and it does come with certain added costs. In addition to the maintenance and operation of your vehicle, you also need to allow for the insurance payments in order to stay legal.

By shopping around and getting multiple quotes, you can be confident that you’ll receive the best possible price for your needs. Enter your zip code into our comparison tool below to get started!