A History of Mandatory Auto Insurance

by | Mar 16, 2018 | Auto Accidents, Insurance, Personal Injury |

Why does South Carolina require me to buy auto insurance?

I’m a good driver, so why should I pay some company thousands of dollars every year? If I cause an accident, why can’t I just pay for it then?

Mandatory auto insurance didn’t just happen arbitrarily. It’s not just a racket. States introduced insurance laws to deal with the problem that arose as more people started driving in the early 20th Century – thousands of Americans were finding themselves financially ruined after being injured in car accidents.

At-fault drivers simply couldn’t pay for the damages that they caused…

The Birth of Auto Insurance in the US

The first auto insurance policy was written by Travelers in 1897 in Dayton, Ohio, just a few years after the first recorded car accident. The idea was modeled after the marine insurance policies that had been written by Lloyd’s of London since the early 1700s.

But with no legal requirement to buy a policy, most drivers didn’t want to pay a monthly premium to cover the costs of an accident that may not ever happen.

Soon, state officials across the nation were becoming concerned that people who were injured in auto accidents were frequently financially devastated, and often unable to get the medical care they needed. Even when liability was clear in a car accident, there was often no way for a victim to collect damages.

Auto accident damages – to both property and bodies – cost far more than most drivers could pay.

The First States to Introduce Auto Insurance Legislation

Connecticut was the first state to try to deal with the problem.

In 1925, Connecticut created the first financial responsibility law relating to auto accidents. The state required a vehicle owner who was involved in a crash with more than $100 in damages to prove they could satisfy any claim up to $10,000.

But, the law still didn’t do much to help accident victims – drivers only had to “prove” they could pay the claim after the accident happened. If, after the crash, the at-fault driver couldn’t pay, the victim still had no way to collect.

Massachusetts Takes the Lead in Mandatory Auto Insurance

Only two years later, Massachusetts enacted the first mandatory insurance law, requiring all drivers to carry liability coverage before they could register their vehicle.

It was almost 30 years before another state required drivers to carry liability insurance, but, after that, mandatory insurance quickly became the norm. New York enacted a mandatory insurance law in 1956, and North Carolina followed a year later. Almost every state, including South Carolina, had compulsory insurance laws by the end of the 1980s.

What Happens in States That Don’t Require Auto Insurance?

Today, only New Hampshire, the “Live Free or Die” state, and Virginia don’t require insurance. Most drivers in those states do carry auto insurance, but there are other options.

In New Hampshire, if you are at fault in an accident, you are liable for damages up to $50,000 – if you didn’t buy the optional insurance, the damages come out of your own pocket.  And, if you can’t pay, your license and registration will likely be suspended.

In Virginia, you can opt out of insurance by paying the state $500 annually – but it doesn’t provide any coverage. If you are at-fault in an accident, you are still liable, and you have to pay out of pocket.

Not Buying Insurance Doesn’t Save Money

So, you can see that not having to buy insurance doesn’t really save money if you’re in an accident. If you cause an accident in New Hampshire, you can still find yourself in horrible debt and without a driver’s license until you can pay the debt.

It’s not surprising that most drivers in both Virginia and New Hampshire choose to carry auto insurance. In fact, the percentage of uninsured drivers is lower than the national average in both states.

What are the Auto Insurance Requirements in SC?

In South Carolina, you are required to carry insurance to cover the following:

  • $25,000 for bodily injury per person, $50,000 per accident;
  • $25,000 for property damage per accident; and
  • $25,000 for uninsured motorist coverage per person, $50,000 per accident.

SC Car Wreck Lawyers in Myrtle Beach, Conway, Columbia, and Charleston

If you have been in an auto accident in SC, your Myrtle Beach auto accident attorneys at Coastal Law will help you to determine if the other driver has auto insurance, what the policy limits are, and if there are other potential sources of recovery.

Call us now at (843) 488-5000 or fill out our online form to schedule a free initial consultation to discuss your case.

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Myrtle Beach, SC 29577

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Charleston, SC 29401

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Columbia, SC 29201

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