What is the definition of Financial Responsibility Law?

The Financial Responsibility Law is a state law that requires all drivers of automobiles in that state. These drivers should be able to prove that they have the means to pay damages up to the minimum amount prescribed by the state in case they get involved in an accident.

This is to ensure that claims arising from such events will be paid and that someone who is injured from an accident is compensated. The minimum amount may vary from state to state.

Also, since the financial responsibilities involved in automobile accident can sometimes be very high, very few drivers will have the ability to pay for the damages on their own. This is where insurance will come into play. Auto liability insurance will cover these financial responsibilities.

• Insolvency
• Misstatement of Age or Sex Provision
• Modified Premium Policies
• Moral Hazard
• Comprehensive Coverage