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Financial Responsibility, which requires individuals to prove their capability in paying for damages in accidents wherein they are at fault, is a law in all 50 states in the U.S. Showing financial responsibility may be by carrying auto liability insurance or, in lieu of insurance, by posting a bond or depositing cash with the state or by paying the state-required uninsured motor vehicle fee to the state’s Department of Motor Vehicles (DMV).

A driver needs to show proof of financial responsibility in about four instances, when he or she: gets pulled over by a police officer; gets involved in an accident; renews his or her car registration; and, renews his or her driver’s license.

The most common way of demonstrating proof of financial responsibility is by carrying auto liability insurance. In 38 states, the type of insurance coverage recognized is the tort system, wherein victims of accidents have the option to file a civil lawsuit against the at-fault driver and wherein compensation is paid to the victim by the at-fault driver’s insurance provider. These 38 states are otherwise known as “tort” or “fault” states. The twelve other states, also called “no-fault” states, recognize the “no-fault insurance coverage. Under this insurance policy, the filing of a lawsuit no longer required since payment for losses and damages (including cost of medical treatment, lost wages, etc.) are made by each driver’s insurance provider regardless of whose fault the accident is. The 12 states where the “no-fault” auto insurance coverage is required are Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New York, North Dakota, and Utah. (In New Hampshire, though drivers have the option to purchase the tort insurance policy, the state does not really mandate drivers to do so; depositing securities or money with the state treasurer or filing an SR-22 is all that is required by the state. In the state of Virginia, on the other hand, paying the state’s Department of Motor Vehicles (DMV) the required uninsured motor vehicle fee, or depositing money or securing a surety bond, are state-accepted alternatives to having auto insurance coverage.

Drivers who will be caught without insurance can face fines, suspension of driving license and may even be required by courts to carry an SR-22 filing, which means much higher insurance premium for the next three years.

In order for drivers to find the policy that would provide them the insurance coverage that they need without paying more than they can afford, free online quotes are made available by certain law firms. Some of these firms, like Habush Habush & Rottier S.C. ®, for example, offer as many as a dozen different quotes; these firms also provide quotes for other insurance needs, including SR-22.

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