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Car insurance is designed to protect drivers and their passengers from financial difficulties after accidents or other vehicle related incidents. Car insurance, or other evidence of financial responsibility, is mandated in every state.

Insurance can be confusing, but it can help you find the right coverage at the best price to better understand how it works and why it's needed.

Car Insurance Requirements

While car insurance requirements vary by country, drivers should always prove they can pay for damages in the event of an accident. This is called proving financial responsibility.

Some countries allow drivers to prove their ability to pay compensation by installing bonds or certificates; However, car insurance is usually the easiest way for the driver to meet the needs.

To find out what kind of car insurance coverage is required in your state, visit our Insurance Terms section.

Benefits of Car Insurance

Before car insurance was widely adopted and mandated, car accident victims usually did not get any compensation in an accident. If the victim demands a driver by mistake, the driver often faces enormous costs that could paralyze the finances.

Requiring car insurance helps the state protect drivers from the enormous costs that can be attributed to accidents. This ensures that both:

  • The at-fault driver can cover the cost of injuries or property damage caused by the accident without losing large sums of money in lawsuits.
  • Accident victims can seek necessary medical care, pay funeral fees, and / or fix their property at the right time without paying from the pocket.

Car insurance can give you peace of mind knowing that you will be financially wrapped up after an accident.