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The Relationship Between Auto Insurance Coverage And Vehicle Registration

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Most states require that you show proof that you have auto insurance before you can legally own a vehicle. The reasoning is that if you own a vehicle, you must be able to prove financial responsibility if you are involved in a motor vehicle accident. If you are considering not carrying auto insurance, understanding how insurance coverage and vehicle registration go hand in hand may help to change your mind.

Financial Responsibility

In most states, the law requires that you show proof of financial responsibility when you drive a vehicle on the roadways. In other words, having auto insurance shows that you have resources to pay for damages and/or injuries you cause if you are the driver at fault in an accident. If you are involved in an auto accident and don't have liability insurance, the state can fine you and suspend your vehicle registration or driver's license.

Evidence of Insurance

Your state's Department of Motor Vehicles checks to make certain that you meet that state's minimum required coverage for bodily injury and property damage liability. If you register a vehicle in a no-fault state, you also must carry personal injury protection (PIP) coverage.

Although it is not mandatory in all states, uninsured motorist coverage protects you and your passengers if you are injured in a crash caused by an uninsured motorist. Minimum auto insurance requirements and coverage minimums vary from state to state.

Same State Registration and Auto Insurance

Although your auto insurance covers you if your vehicle is registered in one state, but you are involved in a motor vehicle accident while traveling in another state, you are not allowed to register a vehicle in one state and purchase auto insurance in a different state.

If you relocate to another state, you will have a specified period of time in which to register your vehicle in your new state of residence. You also will need to update your auto insurance; otherwise, you won't be able to register your vehicle. Some states allow you to register your vehicle before switching your auto insurance to that state, but if you fail to provide proof of auto insurance within the required period, the state can suspend your registration.

Keep in mind that the minimum insurance requirements and coverage minimums in your new state of residence may differ from what was required by your previous home state. Be sure to cancel your policy with your old insurance company.

Vehicle Registration Process

If you go in person to register a vehicle or renew your vehicle registration at your state's Department of Motor Vehicles or local branch office, generally, you are required to provide your driver's license number, vehicle title information (including the vehicle's VIN), payment of all vehicle registration fees, and your insurance ID card to prove that the vehicle is insured.

If you register by mail, you are required to give the name of your insurance company. Many states also require that you provide your auto insurance policy number and your insurer's NAIC code – the number that the National Association of Insurance Commissioners assigns to underwriting companies for identification purposes. You can find the number of your insurance ID card.

In some states, you can renew your vehicle's registration first and then provide proof of insurance coverage later. How long you have to provide proof that your vehicle is insured varies by state.

The insurance companies in many states must now notify the DMV if your insurance coverage is canceled. Some states allow you a specified number of days to provide proof of renewed coverage after your policy has been canceled before suspending your registration.