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What is Mandatory Insurance?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 26 November 2016
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Also known as compulsory insurance, mandatory insurance is any type of insurance coverage that is required by law in order for citizens to engage in certain activities. One of the most common examples of mandatory insurance is a requirement by a state or provincial government that citizens carry a minimum amount of auto insurance before being allowed to drive on the roadways of the state and nation. The exact scope of coverage required will vary depending on the laws that apply to the jurisdiction in which the car owner resides, but are highly likely to include at least mandatory liability insurance that protects other drivers who may be involved in an accident with the insured party.

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The idea behind mandatory insurance is to make sure that at least a minimum of coverage is present should some type of covered event take place. In the case of car insurance, requiring a certain minimum of coverage helps to prevent the necessity of suing for damages after some type of auto accident. Typically, injured parties may sue the person who caused the accident for damages if he or she does not have adequate auto insurance to cover issues such as repairs to the vehicle and any type of medical costs that were directly related to the accident. By requiring mandatory insurance of all drivers of motor vehicles that reside within the jurisdiction, the courts are kept relatively free of this type of activity, allowing the two insurance providers involved to work out the details of making payments to the appropriate parties.

The scope of mandatory insurance will vary, based on regulations that apply in the jurisdiction in question. In some cases, owners of motor vehicles must maintain only basic benefits that cover the medical expenses and repair costs of the injured party, and are not required to also maintain insurance coverage that addresses repairs or medical costs of the insured party. Increasingly, many jurisdictions require that vehicle owners carry what is known as total or comprehensive coverage that provides benefits to all parties involved in an accident. It is not uncommon for laws to require that documentation is carried in the vehicle to prove that an adequate amount of insurance is current in force. In some jurisdictions, presentation of some sort of proof of insurance that complies with state requirements must be presented when renewing a driver’s license or renewing an auto tag or registration.

Failure to secure and maintain mandatory insurance can result in serious legal issues. Law enforcement officers may impose fines if a driver is stopped for some minor traffic infraction and is unable to provide proof of insurance coverage when requested. Should the driver be involved in an accident and is subsequently found to not have at least the minimum amount of insurance required by law, there is a chance that the driver may face either a short term of jail time or at least probation, along with the requirement to not drive his or her motor vehicle until insurance is secured and proof is presented to the appropriate legal authorities.

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Animandel
Post 3

I am surprised at how often people who get into automobile accidents do not have the mandatory auto insurance. I am always hearing stories about someone getting into an accident and then being charged for not having insurance. Mandatory insurance isn't much good when we can't enforce the law requiring people have the insurance.

Drentel
Post 2

@Sporkasia - People who don't think mandatory insurance is a necessity are people who should not be living in a civilization. For someone living on an island all alone mandatory insurance isn't necessary, but for everyone else it is.

I think more types of insurance should be mandatory. Everyone should be required to have insurance that will cover any act that is there responsibility and that causes other people injury or money. If health insurance were mandatory then we wouldn't be paying so much for medical expenses and medical insurance.

Sporkasia
Post 1

I have a friend who is a firm believer in free will and the right of every person to make choices for himself without interference from government or law enforcement. She is the person who always wears her seat belt, but she is so angry that there are laws that require her to wear that seat belt, even though she wore the belt long before there were seat belt laws, and she would wear the restraint if the seat belt laws were repealed.

I am not as extreme as my friend. I understand the need for certain types of mandatory insurance, but I also wonder whether we sometimes go to far. After all, this is life and we can't be insured against every mishap that might possibly happen one day.

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