Understanding Car Insurance Code

Car insurance code is another term for laws concerning car insurance. Each state has state minimum requirements for car insurance or other required proof of financial responsibility that all drivers must carry.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 20, 2021

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Here's what you need to know...

  • Each state has its own code–or set of car insurance standards–required for every person who drives
  • No state has minimum amounts set that are guaranteed to cover serious damages to another person or vehicle
  • If you are a high-risk driver, your insurance premiums will be higher than the average amount

Car Insurance code is another term for laws concerning car insurance. Throughout the United States, each state has its own set of laws concerning the coverage every driver must have on their auto insurance policy.

As someone who operates a motor vehicle, it is your responsibility to know what the car insurance code is where you live. It is essential to know if you are in the market for car insurance coverage.

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Do high-risk drivers have a different car insurance code?

Being considered a high-risk driver is no joke. It means that you will face some very high insurance costs.

You may even have guidelines to follow that the average driver does not. High-risk drivers are those who have been convicted of impaired driving or other types of serious charges involving the use of a vehicle.

Individuals who have received multiple tickets or had multiple accidents within a set period of time will also be considered high-risk drivers.

In many states, if you have accumulated a certain number of demerit points on your driver’s license, you will be deemed high-risk. Certain insurers even consider young drivers to be high-risk simply because they lack experience.

Insurance companies know that high-risk drivers are more likely to cost them money from car accidents.

Therefore, many companies will refuse to insure them or will charge very high premiums.

Each state has an option available for high-risk drivers, which may even be an insurance risk pool. However, car insurance is available to all those with a valid driver’s license if they can afford the premiums.

Car insurance code in many states dictates that high-risk drivers must carry a special type of insurance called SR-22 coverage.

Whether or not they own a vehicle is irrelevant.

Such coverage must be carried in case they drive any vehicle and to show continual insurance coverage, which is important to get reasonable future rates.

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What is the car insurance code for all vehicle owners?

All car owners must abide by the regulations their state has set forth concerning car insurance.

They must carry at least the minimum amount of coverage as mandated by law where they live. In most states, this coverage must include an amount of liability coverage and possibly other types of coverage like Personal Injury Protection or Uninsured/Underinsured Motorist.

Some states require you to provide proof of such coverage before getting your vehicle registered for the years.

Others just require you to be able to produce proof of such coverage when asked by law enforcement.

What happens if you don’t meet the state’s insurance requirements?

If you get into an accident or you’re pulled over by law enforcement and you can’t show proof of insurance, you could face the following consequences.

  • Fines
  • Suspension of driving privileges
  • Vehicle impoundment
  • Vehicle registration suspension
  • Jail time

Check your state laws to make sure you have the auto insurance coverage you need.

Do you need additional coverage?

In each state, the car insurance code for minimum levels of coverage is lower than many consider to be reasonably protective.

In fact, the amounts of auto liability insurance you must carry would be insufficient to cover the medical expenses of someone seriously injured in an accident you caused or the cost of replacing a new car that you destroyed.

In the case of a serious accident, you could be held liable for expenses above and beyond what your insurance pays out.

Because state car insurance codes for minimum coverage are, without exception, insufficient, car insurance professionals recommend that you carry higher limits of coverage for liability.

$100,000 for bodily injury liability coverage per person, $300,000 bodily injury liability total per accident and $100,000 property damage liability coverage per accident are much more realistic levels of coverage than anything any state requires.

Personal property coverage like collision and comprehensive are not required by car insurance code in any state. However, if your vehicle is financed, your lender will require you to carry such coverage as a condition of your loan.

If your vehicle is not financed and its value is significant enough to pose problems for you if you needed to replace it, you should carry this coverage.

Alternatively, if you find that premiums are too costly, this area of coverage is an excellent place to make changes or cuts in coverage.

There are other coverage options that may be beneficial as well, such as medical payments coverage, which pays for medical expenses after an accident, and uninsured/underinsured motorist coverage. If you’re not sure what types of coverage you need, talk to an insurance agent from your auto insurance company.

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What’s the bottom line?

The best way to protect yourself against financial loss due to a car accident is by purchasing adequate coverage through your auto insurance company. The amount of coverage required to drive legally varies by state, but the state-manded minimum requirements will not offer you very much protection. It is strongly recommended you add collision and comprehensive coverage to your policy at the very least.

Different auto insurers charge different rates. When it is time to purchase car insurance, shop around for quotes from multiple auto insurance companies and carefully compare them so that you can get a good deal on the insurance you need and want.

Enter your ZIP code below to access car insurance rates from companies in your area today!


  1. https://www.360financialliteracy.org/Topics/Insurance/Cars-and-Auto-Insurance/State-by-State-Minimum-Coverage-Requirements
  2. https://www.cdc.gov/motorvehiclesafety/impaired_driving/impaired-drv_factsheet.html
  3. https://money.usnews.com/money/personal-finance/articles/2013/10/04/decoding-the-mysteries-of-high-risk-car-insurance
  4. https://en.wikipedia.org/wiki/Risk_pool
  5. https://www.nerdwallet.com/blog/insurance/car-insurance-basics/sr22-insurance/

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