Why Is Car Insurance Mandatory?
With all the debate about health care insurance, people are starting to wonder; if health insurance isn’t mandatory why is auto insurance mandatory? That is an excellent- and complicated- question.
How did auto insurance become mandatory?
Disagreements on compulsory car insurance are as old as cars themselves. As long as we have had cars on the road, we have had car accidents on the road, and as long as we have had car accidents, we have had people who cannot pay for the damages they cause. The first auto insurance policy was sold in 1897, and the first compulsory auto insurance law was passed in 1925 (Massachusetts and Connecticut). Slowly but surely, states began to follow the trend of mandating auto insurance until now, when every state requires drivers to carry auto insurance.
Why is auto insurance mandatory when health insurance isn’t?
So that’s how it happened, but let’s return to the primary question: why is it required and how is it different from health insurance? You may recall from previous blogs that there are many types of auto insurance: liability, comprehensive, and collision insurance are the three big ones. Liability covers the other people in an accident, whereas comprehensive and collision cover you.
State regulations only mandate that drivers hold liability coverage- this truly protects the other people around you should you get in an accident. It will pay for their medical bills, their physical damage, and their other bills, not yours. On the other hand, healthcare insurance pays for your medical bills and yours alone. Through this lens, collision and comprehensive auto insurance are more similar to health insurance than liability coverage.
And that serves as a good reminder: if you are only purchasing the state minimum car insurance, you are likely underinsured. You will be stuck paying for your own expenses out-of-pocket, which adds up fast. You can receive way more coverage for just a little more expense- it will save you tenfold should you ever get in an accident.