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 insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Aug 19, 2021

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Here's what you need to know...

  • In 1927, Massachusetts became the first state to make car insurance mandatory
  • Car insurance is mandatory in 48 states plus the District of Columbia
  • New Hampshire and Virginia do not have mandatory car insurance coverage
  • Each state has different mandatory coverage limits for car insurance coverage

The history of car insurance dates back a long time. Ships hundreds of years ago were insured for losses from storms by maritime insurance policies.

In the late 1800’s insurance became available for a driver of a horse and buggy. As the automobile became more popular the use of wagons and buggies dropped with insurance becoming available on for more people.

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The First Car Insurance Policy

The first recorded automobile insurance policy was issued in 1897 and was sold to a doctor from Ohio to cover any accident between his car and a horse.

When adjusted for inflation, that policy would cost around $300 in 2010. The need for car insurance grew over the following 20 years because of the increasing number of automobile accidents involving pedestrians and animals.

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The Need for Car Insurance Coverage


Massachusetts was the first state to make car insurance mandatory in 1927. Wisconsin is one of the last states that adopted mandatory car insurance in 2010.

Some of the early car insurance policies were designed to protect the assets of people by exchanging a premium payment paid to an insurance company in exchange for a promise by the insurance company to pay for losses the insured suffered.

The risk of a loss determined the premium cost for the insurance.

States That Have Mandatory Car Insurance Coverage

Each state sets their own minimum mandatory coverage limits. This can mean a large difference in premiums from one insurance company to another. Insurance is mandatory to purchase in all but two states.

Those states are New Hampshire and Virginia. In New Hampshire and Virginia you are required to pay for any bodily injuries or property damages if you decide not to purchase car insurance.

If you do not buy car insurance in Virginia you are also required to pay a $500 uninsured motor vehicle fee.

Coverage Varies for Each State

States now require car insurance to be carried on a vehicle that is titled in that state. The minimum coverage is different from one state to another.

Each state elected to make car insurance mandatory beginning in 1927 with Massachusetts through to Wisconsin in 2010.

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The Mandatory Coverage for Car Insurance

A car insurance policy is made up of different kinds of coverage. Each state determines their own minimum required coverage limits. The coverage includes:

Liability for Bodily Injury

There will be a liability limit for each person and a total for each incident. This coverage insures expenses related to the injury of a person.

Liability for Property Damage

There is a liability limit for each accident. This coverage insures expenses related to damage of property like another car or a building you hit. Your own vehicle is not covered under this category.

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Personal Injury Protection or No-Fault Coverage

There is a liability limit for each person and each accident. This category would include items like medical bills, lost wages, or rehabilitation.

No-fault automobile insurance was first adopted in 1972 with Hawaii following in 1974. There are currently 12 states with no-fault insurance laws.

Uninsured/Underinsured coverage

There is a liability limit for each person and each accident. This category would give you coverage if another car hit you and they did not have car insurance.

You would also have coverage if the other driver had lower coverage limits on their car insurance policy than you did and your car insurance limits are higher.

Drivers that do not carry insurance can be a major financial threat on the roads. If you are injured or you have property damage you want to make sure the driver responsible has insurance.

Uninsured drivers represent one in eight cars on the road today according to the Insurance Information Institute.

Collision Damage

There is a limit for each accident. This category would pay for replacement or repair of your car when damaged and you are driving. Damage to a car belonging to another person would be covered under your liability coverage.

Comprehensive Coverage

There is a limit for each accident. This category will pay for the repair of damages to your car when it is not being driven like when a tree would fall on your car.

Mandatory Coverage Requirements Change


Each year states make changes to the car insurance laws and the mandatory minimum coverage requirements may be increased.

There has been large public support for mandatory car insurance requirements in states but there are still a large number of uninsured drivers in each state.

Fines For Not Having Mandatory Car Insurance

States have been increasing fines and penalties for drivers that do not have current car insurance coverage. States have also found that having larger fines for not carrying car insurance serves as a good deterrent to drivers that avoid buying car insurance.

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Consequences of Not Having Mandatory Car Insurance

There have been 12 states that have passed laws banning uninsured motorists from being able to sue for damages like pain and suffering. In 2014 there was over $72 billion of incurred losses for liability coverage and over $45 billion of incurred losses for damage coverage.

Need for Buying Mandatory Car Insurance

Motor vehicle crashes have a terrible impact on people. The total economic impact of vehicle crashes in 2010 was over $277 billion which averaged to nearly $900 for every person living in the United States.

Some states require that insurance companies offer motor vehicle discounts for drivers over 55 and safe drivers. There are also many other discounts available from insurance companies. This is why it is important to compare insurance policies for the best coverage and rate.

Shop Around for your Car Insurance Coverage

Mandatory car insurance has been around since 1927 and almost all states require you to carry car insurance. The costs can vary extensively based on the coverage limits you select.

You can save money by comparison shopping between different insurance companies. You will be able to find the policy that has the best coverage for you.

Before making any final decisions on your insurance company, it is important to learn as much as you can about your local insurance providers, and the coverages they offer. Call your local insurance agent to clear up any questions that you might have. Questions to consider asking include, “What is the best coverage plan for me/my family/my situation?” “What are the minimum coverage requirements in my state and what form of coverage do you recommend?” “Do you guys offer any bundle discounts if I take out both my auto insurance and home insurance with you?” and “What is the average rate of insurance quotes you guys offer?”

Before making any big insurance decisions, use our free tool to compare insurance quotes near you. It’s simple, just plug in your zip code and we’ll do the rest!

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