What Proof of Financial Responsibility Must be Maintained by Drivers?
Proof of financial responsibility is the evidence that a driver is required to provide to show that he or she is capable of handling the financial consequences of possessing or driving a vehicle in case of any vehicular accident. The regulations on financial responsibility are created for the purpose of maintaining the practice of safe driving and protecting the financial interest of the public at large. Upon application or renewal of car registration, a person driving or owning a vehicle is often required to show any document that proves financial responsibility. It also goes the same way when a person driving is stopped due to a traffic violation or is involved in a roadway accident. Financial responsibility laws apply to both driver and registered owner of a vehicle.
Proof of financial responsibility requirements vary from one state to another but obtaining a car insurance policy for your vehicle is the most recognized, accepted and common way of maintaining a proof of financial responsibility. A driver or owner of vehicle operating in the United States is required to obtain a legible copy of the evidence of financial responsibility. Evidence of financial responsibility may be in a form of a document issued by the insurance company such as an insurance covering note or insurance binder. Proof of financial responsibility should also be maintained at the principal place of business of the motor carrier. A written authorization from the Federal Motor Carrier Safety Administration permitting a motor carrier to self-insure is an example of proof of financial responsibility. There are also other ways to prove financial responsibility in some states such as posting a surety bond to satisfy the public minimum requirement, filing a government bond and keeping cash deposit.
Every state has minimum liability insurance requirements that any person driving or owning a vehicle needs to meet. Liability insurance guarantees financial responsibility which is required by law in every state of America. It’s only in New Hampshire that a driver is not mandated by the state to obtain a car insurance policy on his or her car during vehicle registration. New Hampshire nevertheless has financial responsibility laws which provide financial protection in case of a car accident. Bodily injury coverage and property damage insurance are policy types which are required in many states. Bodily injury coverage pays medical and other expenses necessary to restore the health condition of the person injured while property damage insurance policies pays for the damages suffered by the vehicle or other properties involve in the accident. A driver or owner of a vehicle which is not covered by an insurance policy typically faces financially devastating consequences after a roadway accident.
In most states, if a driver doesn’t maintain the proof of financial responsibility it could lead to suspension of vehicle registration and license which necessarily means he or she is not allowed to enjoy the license driving privilege for a span of time. Lack of proof of financial responsibility is even a legal ground to bar any vehicle from entering and operating in any area within the United States.