Having a financial responsibility law in place for you can protect you from becoming involved in an accident and ensure you are not responsible for damages to someone else’s property or injuries. While some states may require you to have car insurance, other states may have their own financial responsibility laws that are more comprehensive.
You may be asked for proof of financial responsibility during a traffic stop, at a vehicle registration or renewal, or during a driver’s license reinstatement. In some states, the proof of financial responsibility may be a binder of car insurance policies. In other states, it may be a cash deposit from the vehicle owner, or it may be a surety bond. Some states may allow you to self-insure your fleet.
Financial responsibility laws are aimed at protecting all drivers from getting involved in an accident and ensuring that high-risk drivers are able to meet their legal responsibility. While most states will accept proof of car insurance, others may require you to show proof of a surety bond.
You may be required to file an SR-22 certificate in order to prove that you have sufficient insurance coverage to cover damages in an accident. This certificate is required for three years. If you fail to file the certificate, your driver’s license will be suspended. You will also need to pay a reinstatement fee. The fee ranges from $200 to $500.
The best way to ensure you are financially responsible for your actions is to ensure you have the minimum required insurance. Most policies come with a minimum coverage amount that meets the state’s standards. If you are required to provide proof of financial responsibility, this is the easiest way to comply with the law.