You must comply with the driving insurance laws.
You have at least five good reasons to obey the driving insurance laws, running the gamut from protecting your body to protecting your investment in your car.
Any place that requires drivers to obtain licenses inevitably requires they also obtain insurance. In the strictest terms of the driving insurance related laws, providing proof of coverage for bodily injuries and property damage proves the driver is financially responsible for anything that happens as a result of his or her recklessness or negligence. In other words, the driving insurance laws demand proof that you can pay for an accident; insurance is your proof. Most driving insurance related laws allow you to set aside thousands of dollars in a bank account instead of buying insurance; common sense inspires most people to wonder, “why would I tie-up my money like that?”— an excellent question.
What happens when you don’t follow the driving insurance laws?
In most jurisdictions, if you fail to follow the driving insurance laws, you cannot obtain a license. The examiners demand proof of insurance as a condition of taking the written and behind-the-wheel tests for licensure. Parents must show proof of insurance for their under-age drivers and accept responsibility for them.
If you already have a license but fail to show proof of insurance, your license and registration may be suspended until you obtain proper coverage. If you are stopped for a traffic violation and cannot show proof of insurance, law enforcement officials may demand that your surrender your driver’s license. In extreme cases, law enforcement officials may impound your vehicle, towing it to a storage yard and keeping it there until you can show your compliance with the driving insurance laws. You pay daily storage fees on the impounded vehicle, and you suffer the inconvenience and frustration that go with having no vehicle.
One other provision in the driving insurance laws is especially nasty: If you have secured a loan on your car, your lender inevitably will demand not only liability insurance, which protects you and your passengers, but also “comprehensive” and “collision” insurance, which protects the vehicle against all kinds of damage and theft. After all, the lender wants to protect his investment in you and your car. If you do not provide the insurance coverage your lender demands, the finance company has the right to repossess your car. In fact, if you do not provide the right insurance, the lender can repossess the car no matter how well you have kept-up with your payments.