Why is Car insurance mandatory?
Posted by One_Fold2932@reddit | AskAnAmerican | View on Reddit | 105 comments
If, hypothetically, someone were to get into a car crash, they could financially compensate the other party. If they needed to get their car repaired, they could also pay out of pocket instead of relying on insurance to cover it. Insurance companies also try to find loopholes instead of paying you in times of need. If I bought a used car for around $2,000, and insurance cost about $200 per month, then in a year I would have paid more in insurance than the car was worth. Also, there is a low probability of getting into an accident if you are a decent driver, yet you would still be tied down by the expensive subscription that is car insurance. Also, for some reason its illegal to no have car insurance.
carlos_the_dwarf_@reddit
Because (1) not everyone has the money on hand to do this and (2) in a bad crash the amount to do so very quickly can get out of hand even for someone with plenty of savings.
The type of car insurance that covers damage to your own vehicle isn’t mandatory. Only the part that covers damage you do to other people’s stuff or bodies.
This is the main thing: driving carries risk—not just for you but for other people. If you’re going to drive it makes sense to ask you to be able to pay for that risk.
One_Fold2932@reddit (OP)
Honestly, I was just thinking about fender benders, and the thought of fatal car crashes completely flew over my mind.
TheBimpo@reddit
I hit a deer and it was $4500 to repair the light damage to my Subaru. Cars are made to collapse/absorb impacts and they’re very expensive to repair.
TwinkieDad@reddit
For real?
Fender benders can be expensive too, thousands of dollars.
crimson_leopard@reddit
With the newer cars that have technology a minor fender bender could be $1k by itself. I accidentally hit a dog that ran through the road at night and it damaged by bumper and front collision sensor. Even a windshield replacement without insurance is $1k since there's sensors in there. On older cars without that technology it's more like $300.
SplitOpenAndMelt420@reddit
Let's just be reasonable and say if someone is driving a $60,000 car, how much do you think a fender bender is going to cost them? Thousands and thousands of dollars
t-poke@reddit
My dad slid on some ice while approaching a stop sign in his Hyundai Santa Fe, barely tapped the car in front of him, causing some minor damage to his car and the repair estimate was around 6 grand.
People have no idea just how expensive cars are to repair. Especially modern cars which have all sorts of sensors and shit.
I carry the maximum liability limits offered to me. I don’t want to be taken to the cleaners because I hit someone’s Lamborghini…or F-150. Because those can be optioned into the 6 figures.
PrinceRoxasReddit@reddit
Because if you have insurance and someone else hits you, your insurance will cover you and go after them for the money. Or, if someone hits you in a parking lot and then drives off while you're shopping
DoublePostedBroski@reddit
Isn’t there somewhere like Vermont or something that doesn’t have mandatory liability?
Current_Poster@reddit
New Hampshire, but yeah.
GreenBeanTM@reddit
Just to back that other person up, New Hampshire is the only state to not require liability insurance. Vermont requires you to have a minimum policy or bond of $25k for one person killed or injured, $50k for two or more, and $10k for property damage.
-Boston-Terrier-@reddit
New Hampshire
shelwood46@reddit
Right, I truly did buy a used car for about $2500 in 2020. It is a sedan, so my insurance is about $50/mo (SUVs/Trucks cost more even if it is only liability). My state requires it, and it covers other drivers, not me. If I total it through my own actions, that is on me, my insurance will not pay a cent.
Wunktacular@reddit
My car is worth $40,000. Can someone driving a $2,000 car afford to replace mine if they total it and it's their fault?
GotMeAMuleToRide@reddit
I can but I'm one of those weirdos who only cares about owning something just capable of getting me around. But I still carry liability so I don't have to worry about it (as much).
Wunktacular@reddit
Yeah I get you. It's just that OP is complaining about how $2-3,000 of insurance puts them in a bind. If that's the case, they're not putting a new subframe on an F150 out of pocket.
DoublePostedBroski@reddit
What if the other person flees the scene?
What if they could afford to compensate the other party?
ELMUNECODETACOMA@reddit
People who think they are "decent drivers" are the ones who _most_ need insurance...
Suitable-Roof-3950@reddit
1) that would suck 2) they always have that option
GreenBeanTM@reddit
I currently have about $300 sitting in my bank account. If I got into an accident with you, no, I could not afford to replace or repair even your dumpster of a $2000 car.
I think my bank account would actually grow a mouth just to laugh if you also had hospital bills you expected me to cover out of pocket.
TeamTurnus@reddit
Your being required to coverthe damage you might do to the other person not yourself
Penguin_Life_Now@reddit
Because there used to be way too many deadbeats with no insurance and cars that would walk away and not pay after causing thousands of dollars worth of damage, and less than $100 to their name.
Imaginary_Ladder_917@reddit
In my experience, our insurance was very reasonable after an accident causing injury. They did go head to head with the health insurance company for awhile but eventually worked it out
mr-singularity@reddit
For several reasons. For one your car doesn't exist in a bubble. Causing an accident can harm others physically and financially too.
Two laws typically take the stance that one off events can harm society too. Especially if they happen frequently enough that everyone will likely be the victim at least once in their life. You've probably been in a accident or will be in one at some point. If we just shrugged it off as happenstance, that would be a major blow to society (unless we socialized all damages).
Three causing damage makes you personally liable in many cases. Having insurance covers you for the bulk of all situations. They have lawyers and third party fact finders that you as an individual likely don't have access to.
Four it keeps courts moving efficiently. In many ways you could see insurance companies as its own psuedo court system that keeps most cases out of real civil court.
Five it allows states to maintain a image of fairness and security on their road ways. If everytime you drove there was an almost certain chance that someone hitting you would leave you in the water. Would you feel the same about driving?
Quicherbichen1@reddit
A large portion of the drivers in New Mexico DON'T have insurance. That is the biggest reason I DO have insurance...to cover those uninsured drivers. Since my business is as a rideshare driver, if my car is out of service, I can't make any income. My car insurance will cover my expenses while my car is being repaired/replaced.
Louisianimal09@reddit
Car insurance isn’t just for the car. Property damage is a big one too. You hit someone’s house, business, parked car, a telephone pole, etc. etc. the dollar amount skyrockets.
Your insurance isn’t for you. It’s for everyone else
byamannowdead@reddit
It’s not just the cost of vehicle replacement. Could you cover the cost of crashing into a building? Or medical costs of injuries? We don’t have “free” healthcare.
One_Fold2932@reddit (OP)
I thought that if you had a job in the US, especially a government job, ur employer covered all your healthcare costs.
JudgeWhoOverrules@reddit
Healthcare insurance is just that, insurance. It comes with coverage options and limits, it's not a free pass card any at all costs with an unlimited limit.
t-poke@reddit
How old are you? I’m guessing you’re very young and have no idea how the world works.
shelwood46@reddit
They do not understand the concept of "insurance" so definitely under 25.
KrazySunshine@reddit
Not even close
DoublePostedBroski@reddit
Uh no.
It’s subsidized, but I still have to pay $200 a month. And then I still have an annual deductible then co-insurance, and then an out of pocket maximum.
KrazySunshine@reddit
That’s hilarious
SplitOpenAndMelt420@reddit
Hahahahahahahahha
byamannowdead@reddit
Yes, many employers offer subsidized health insurance, still need to purchase the plan (usually with tax savings on your cost) and it only covers some of your costs, we still get a bill for things outside of routine checkups. A major car accident can cost $75,000 in medical bills alone. Not to mention that person probably isn’t earning an income while in the hospital.
And government jobs only account for about 14.5% of our workforce.
xxxjessicann00xxx@reddit
Lmao
suzemagooey@reddit
It is mandatory because those of us who do have insurance do not want to share the roads with those who don't for what should be obvious reasons. The lawmakers, who likely also have insurance, sided with us, plain and simple.
Ok_Gas5386@reddit
Hypothetically, if no one bought insurance and just put the money in treasuries, they would be able to pay for their collective accident damage and then some, because the insurance companies take a profit.
The issue is, people suck at doing that. Our system is very good at hoovering up our disposable income, which is part of the reason why most people can’t cover emergency expenses. Further, one catastrophic accident could financially ruin a person, and the other people aren’t going to chip in to help them out. Insurance achieves that.
The reason it’s mandatory to have insurance is because uninsured drivers pose a financial risk to everyone else on the road.
crimson_leopard@reddit
I recently got hit by some kid without insurance. If he can't afford insurance, there's no way he can afford to pay out of pocket for $20k in damages on just my vehicle. This doesn't include the damage on the other vehicle that I was pushed into, his own vehicle, the ticket he got, or any health problems anyone might have sustained from the accident. Good thing I had insurance that paid out for the cost of my car so I could put that towards another one since I need it to get to work.
KrazySunshine@reddit
How about when a big deer jumps out in front of my car and I hit it and it and my car is severely damaged it needs to be towed. Is the deer supposed to pay me? Good thing I had insurance to cover the cost.
o93mink@reddit
…that’s not the kind of insurance that’s mandatory
KrazySunshine@reddit
What do you mean? Car insurance is mandatory. I used my own insurance to pay for the $7000 repair.
SplitOpenAndMelt420@reddit
It's only legally mandatory for liabilities
KrazySunshine@reddit
Collision is mandatory in NJ if you have a car loan or lease, that’s why I asked if they meant collision and I said I had a loan so I had to have collision
Crayshack@reddit
Because if you get hit by a driver who doesn't have insurance and can't pay, then you're SOL. So, drivers are required to have liability insurance when they are operating a death machine that weighs several tons.
Otherwise-OhWell@reddit
Aw man, I remember when I (18 yrs old) had my license suspended and later had to pay for "high risk" insurance when it was reinstated. Life gets better.
cryptoengineer@reddit
Your $2000 junker can total an $80,000 pickup. How deep are your pockets?
GhostOfJamesStrang@reddit
This can't be a real question. I refuse to believe it.
Tommy_Wisseau_burner@reddit
To make sure, if something happens, the other person isn’t left with the bill because the other guy can’t pay and/or doesn’t have the assets
LetsFuckOnTheBoat@reddit
Because all insurance is a big scam
SplitOpenAndMelt420@reddit
If you can't understand why car insurance is important and vital to us being able to drive on the roads I don't know how to help you
LetsFuckOnTheBoat@reddit
2025 - Major carriers reported record results, including Progressive ($11.3B net income), Allstate ($10.2B), and State Farm ($12.9B)
SplitOpenAndMelt420@reddit
Yeah, they make a lot of money because every single person who drives a car in this country is required to have car insurance for a very good reason
LetsFuckOnTheBoat@reddit
So that's why they have to gouge everyone
tiger0204@reddit
It's not illegal to have no car insurance. You just have to prove you have the ability to cover damages and may have to park tens of thousands of dollars in an untouchable account to cover yourself in lieu of an insurance policy.
DoublePostedBroski@reddit
And you have to do this and get a certificate of self-insurance. It’s not like you can just decide not to have it.
winnielikethepooh15@reddit
So you're like 7 years old?
SplitOpenAndMelt420@reddit
Babies first car insurance
Adept_Carpet@reddit
It's not about the damage to the car, it's about the damage to the people in the cars.
JacenVane@reddit
If you can prove your ability to do so, you are often not required to carry car insurance. Look up self-insurance.
Foreskin-Aficionado@reddit
The vast majority of Americans can’t afford self-insurance which makes car insurance through a company legally required for most Americans.
You’d pretty much need to be a multimillionaire to comfortably do this, which is unfortunate since car insurance premiums keep climbing
JacenVane@reddit
Yep. That's why they're required to purchase insurance.
techieman34@reddit
Get used to it, it’s going to keep going up. So many new cars have lots of expensive sensors and other electronics in the bumpers these days. So fender benders that 10 years ago wouldn’t have been expensive enough to cover the deductible are now several thousand dollars.
aaronhayes26@reddit
Self insurance is only permitted for non-fleet usage in a few states. It’s extremely rare.
CoderPro225@reddit
Also: things happen outside your control that don’t involve driving.
Last time I had an insurance claim for my car it was for weather related damage that totaled upwards of $10k. Granted, this was my own vehicle and I did have comprehensive coverage, but I also didn’t have an extra $10k laying around to make my car drivable after a freak wind storm took down the garage, threw objects into it and smashed it up. Pretty grateful for the insurance then!
ComprehensiveStay755@reddit
insurance isn’t for your $2k car, it’s for the $80k SUV and the person inside it you might hit
Excellent_Speech_901@reddit
In California you are allowed to self insure. This requires having $35,000 at the DMV to cover possible liability.
mittencamper@reddit
Your car insurance payment isn't for your shitbucket car. It's for my nice car.
gramj_fw@reddit
You are only required to have liability insurance. You aren't required to have coverage for damage to your car, you are only required to have coverage for damage you do to other people's property while driving your car.
This is a good thing in my opinion. Repairs are expensive. It's easy to do thousands of dollars in damage to a modern vehicle. Even worse, think about how much American medical bills cost. Many people couldn't even come up with a few thousand dollars in cash if they had to.
BryonyVaughn@reddit
You can buy car insurance that won’t repair or replace your vehicle. The issue is if you take out someone else’s property or unit someone.
I was in a car crash a few years ago that I walked away from seemingly unscathed. The insurance paid out $6,800 for my totaled car and $70,000 for my medical bills. Image being financially on the hook for hitting someone that resulted in four people hospitalized with surgery and rehabilitation at the cost of US healthcare. People would declare bankruptcy and others would have entire families devastated by not only untreated injuries of loved ones but financial ruin. One person’s uninsured car crash could bankrupt several families losing then homeless.
6gravedigger66@reddit
So if you're driving a car that's $2000 because that's what you can afford. And you get into an accident with say a Mercedes, do you have pocket money to fix or replace that Mercedes?
iMakeUrGrannyCheat69@reddit
You can get away with no insurnace in 2 ways.
1.) You just simply dont have it and skirt by without getting pulled over.
2.) You have to prove you have the financial capabilities to cover so much in damages.
Its also not as simple as i drive a $2,000 car and i can just get another $2,000 car while also covering a fender bender to the impacted party. Insurnace also can cover medical expenses and property damages which can easily go into the tens of thousands if not hundreds of thousands depending on the accident (american Healthcare for the win! /s)
You have to also consider when you get into an accident that the other person more than likely isnt driving a $2,000 car. Many Americans drive $30,000-$120,000 vehicles and the ultra wealthy drive $250,000-$500,000 vehicles as their day to day car. You get in a wreck and total out a $500,000 vehicle and are at fault, itll take a lifetime and a half to pay it off. While you get garnished wages, court battles, and attorney fees.
Not to mention the person that had their $500,000 vehicle or property damaged will have to wait their entire lifetime to recoup their losses that you caused, if they ever do.
Vulpix_lover@reddit
It's mandatory because people suck at operating vehicles, it doesn't matter how good you think you are, it's about how stupid the person in front, behind, and on the sides of you are.
Also the whole, dealing with car damage without getting insurance companies involved is common place depending on what kind of damage it is
thingsbetw1xt@reddit
The average person is absolutely not in a position to compensate someone else's car and medical bills, certainly not in a timely manner. That can be tens of thousands of dollars. If someone hits you, destroys your car and leaves you with injuries, you need that money now and 99.9% of people won't just have that lying around.
This also is not my experience with car insurance. I had an accident recently and he absolutely no problem with them. Car companies are under much more legal obligation to actually do their job than health insurance companies are.
Dramatic-Blueberry98@reddit
The other thing about insurance, is that the companies will typically be the ones to hash out any legal details rather than the policyholders having to be more hands on, as well as paying out more for attorneys on the fly.
iranoutofspacehere@reddit
The government requires you to have liability insurance (or equivalent) to make sure that you can pay someone else to fix their car if you run into it. The cost of that insurance isn't based on how much your car costs, it's based on how much damage the insurance company thinks you and your car will do.
If you have a loan, the bank may require collision and/or comprehensive insurance to make sure you can pay to fix your car if you wreck it. They want to make sure the car stays in good shape because they may need to sell it someday if you can't pay your loan. This insurance is based on how much the car is worth, since it's directly related to how much it'll cost to repair.
kingoflint282@reddit
I’m a personal injury attorney and I do mostly car wrecks. If there’s no insurance we won’t even take the case because most people don’t have that kind of money sitting around, and even if they do, it takes a lot of time and money to get a verdict. Insurance companies by contrast exist to pay in these situations, although they don’t make it easy, it’s far easier than collecting an individual judgement
PuzzleheadedLemon353@reddit
What about when they can't or won't compensate? Make it mandatory and problem solved.
diplomystique@reddit
There are different types of car insurance. The mandatory kind is third-party liability insurance: if you cause an accident that causes economic, medical, or life loss on someone else.
We require liability insurance because we don’t trust you. I have a family and a good job. If you kill me, my family has lost a stream of income worth at least a $3-4 million in present-day value, not to mention any medical bills, emotional harm, loss of consortium, etc. The sorts of people who have that kind of cash lying around don’t drive $2,000 shitboxes and complain about the cost of bare-bones insurance.
You’re not good for the money. We don’t trust you. That’s why we don’t let you drive your crappy car without insurance.
shammy_dammy@reddit
So if you run your 2000 dollar clunker into the side of a 70,000 dollar car, you're going to be able to pay for that out of pocket? And then if there are injuries? And a lawsuit? You good for that?
dangleicious13@reddit
Most people can't afford to to pay th other person if they are at fault.
o93mink@reddit
Well, the insurance to fix your own vehicle isn’t mandatory
dangleicious13@reddit
Never said it was. Just saying they can't afford to fix their own vehicle. Much less your vehicle as well.
Vegetable_Amount848@reddit
“low probability of getting into an accident if you are a decent driver”
What about the not-so-decent drivers on the same roads as you?
Your post makes absolutely no sense.
Weary_Capital_1379@reddit
To protect victims.
old-town-guy@reddit
OP doesn’t live in the real world.
mustang6172@reddit
Can you afford to crash into a Rolls Royce?
CDA_CPA@reddit
We don’t have universal healthcare, and the costs of a hospital after a wreck can bankrupt even well off people.
bigblue2011@reddit
Everyone is well intentioned. The problem is that flukes happen. With a large enough of a data set, you can affordably spread the risk.
Somewhere, there is a statistical table that shows how often an odd occurrence might happen (I.e. a surgeon gets hit by a car and his operating hand is permanently disfigured).
Everyone would say, “Hey, if I did that, I’d take care of that person.” Truth is that almost no one outside of the really rich can pay 400k per year over the next 20 years to make the surgeon “whole.”
Cars can cause a lot of damage!
BitterPillPusher2@reddit
A serious injury in the US could easily top $1 million in medical costs. That's not even including time missed from work, pain and suffering, etc. Most people don't have a couple million dollars lying around to pay someone if they cause an accident.
Reasonable_Mood_5260@reddit
Without mandatory car service insurance the courts would be overrun with people suing each other.
Grouchy-Macaron-1780@reddit
Paying for property damage is one thing, but the real liability is if you cause permanent injury or death. Then you will likely be sued in court for monetary damages which may amount to millions of dollars.
Should you injure or kill someone in an accident due to gross neglegence, (drunk driving, not paying attention- texting or otherwise), or by racing through traffic, the penalties will likely involve prison time.
Even if one is self insured, the cost of insurance is minimal compared to the potential out-of-pocket loss in an injury or death case.
Why clean out your life savings if you dont have to?
madogvelkor@reddit
If you have a couple hundred thousand dollars lying around, sure.
Your car might only be worth $2,000 but what if you crash into a $70,000 car and injure 3 people who get $100,000 in hospital bills.
Or you crash into a building than needs $80,000 in repair work?
nitsujenosam@reddit
So every driver is currently capable of compensating the other party for personal injury, death, or property injury?
o93mink@reddit
Sure, everybody has the $250k or so policy limit laying around in cash just in case they hit somebody, obviously.
smcl2k@reddit
Roughly half of Americans couldn't cover an unexpected $1000 expense without borrowing money, and there's going to be a lot of overlap between that group and people who wouldn't bother with insurance.
Would you want to sue someone with no money...?
FunTricky903@reddit
If you’re driving a $2000 car, you’re not going to be able to afford to pay out of pocket for any damages.
Adjective-Noun123456@reddit
Unless they couldn't.
My bumper costs more than your entire car. If a $2,000 car is all you can afford, you can't afford to replace my bumper if you hit me.
Your insurance company on the other hand...
If you're the only vehicle on the road, sure.
The reasons should be abundantly obvious.
jessek@reddit
Because people generally do not have the cash on hand to pay out what insurance settlements are. It is possible in some states to self insure, but that involves putting a large amount of money into an escrow account that’ll pay out in lieu of an insurance company.
Individual_Check_442@reddit
You only have to have liability insurance not on your own car. In theory you could pay for someone else’s damage with your own money but then most people don’t have it
Sabertooth767@reddit
Do you have the cash to cover my car and my medical bills? No? Then you ought to have insurance before you put me in danger.
SplitOpenAndMelt420@reddit
How am I supposed to be assured that the person who hit me can pay out of pocket!?!?
This is the literal reason insurance is mandatory, and it makes total sense
JustAnotherDay1977@reddit
Because people who could hypothetically pay for the damage wouldn’t necessarily pay for it when the time came.
o93mink@reddit
Because most people can’t financially compensate the other party, and we don’t want to bog down the legal system with lawsuits of people suing each other over $2,000 that the other party doesn’t have.