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Why is car insurance mandatory or required ?

Why is car insurance imposed ?


Driving without a valid car insurance is an offence and can attract severe penalties and can even lead to a suspension of your driving license. There are several reasons why getting a car insurance has been made mandatory in over the world.




There are really at least two answers to this question - the public policy answer and the cynical lobbyist answer.

The public policy answer is pretty much what Jayne Spottswood mentions - that the point of mandatory insurance is to protect the citizens from having to suffer major financial losses for damages caused in an accident. This protects both the at-fault and non-fault driver, since both should have some level of in the case of an accident. It's probably cheaper to have insurance than it is to pay for the damages related to a car accident.

The cynical lobbyist answer is that mandatory insurance is a subsidy of the insurance business put in place by the states, in response to political pressure. By requiring people to have insurance, and by requiring that they pay for it out of their own pocket, the states are ensuring that insurance companies have a greater share of business than they might otherwise in a "free market".





Personally, I think the truth is somewhere between the two sides of the spectrum. There is absolutely a public benefit to mandatory insurance, but the manner in which it was implemented undoubtedly also benefits the insurance companies doing business in the states that have the law.


Found in Quora.com Writed by Cliff G.


Hi, I work for iMingle Insurance . I’m not a licensed agent, but I asked one of our representatives. He said states require drivers to buy car insurance in order to protect state citizens. Injuries and property damage from car accidents can be quite expensive. Since many people could not afford to pay for injuries and damage they cause without insurance, states establish minimal levels of mandatory, or legally required, coverage to provide this basic protection for their citizens.

However, these state-required minimum level policies may not give you the amount of protection you need or offer the benefits you want in case of an accident—especially of you are hit by an uninsured or minimally-insured driver. We recommend car insurance customers look into higher liability limits and comprehensive physical damage coverage to fully protect themselves.


Found in Quora.com Writed Jayne Spottswood