Financial Responsibility Laws

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What Are Financial Responsibility Laws?

Financial responsibility laws essentially say that when you are in an automobile accident or are convicted of a moving violation, you must show that you are able to pay for any damages. The purpose of this law is to be sure that if a person gets into an accident with another person, he or she can pay for the damage done to other individual's car and person if it is their fault.

Different states have various ways of proving financial responsibility, but the most common is whether a person has automobile liability insurance. Some states allow other methods of proof of financial responsibility, such as depositing cash or acceptable securities into a trust fund held by a state official, or posting a bond with the state.

What Are the Consequences of Not Having Auto Insurance?

Having automobile liability insurance comes with certain benefits that could be quite costly to be without, if you are in a car accident.

Your insurance provider will usually provide you with an attorney if you are sued.  Without auto insurance, you will be stuck with having to hire your own attorney and even if the trial ends in your favor, you will have to pay all the court costs and attorney bills yourself.

If the other motorist sues you, and you do not have insurance or an attorney, you could personally owe up to hundreds of thousands of dollars if you are found liable. In that case, the other motorist becomes your creditor and could institute legal proceedings for collection of the money you were determined to owe.

Regardless of fault in a car accident, if you do not have auto insurance your state may carry penalty laws that forbid you from asserting any claims against other motorists in the event of an accident.

Should I Contact a Lawyer?

You should immediately consult an attorney who has experience dealing with automobile accident claims. Your attorney will be able to advise you of your rights and let you know what possible courses of action you can take, along with what defenses you might have.

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Last Modified: 02-27-2014 03:28 PM PST

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