Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Oct 30, 2020

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What You Should Know

  • What is proof of financial responsibility? Proof of financial responsibility guarantees that a driver can afford to cover the expenses associated with a car accident.
  • Carrying an auto insurance policy that meets or exceeds your state’s minimum auto insurance requirements will count as evidence of financial responsibility.
  • In some states, proof of financial responsibility can include a cash deposit, a surety bond or real estate bond, or even a government bond with your state.

When it comes to auto insurance, proof of financial responsibility refers to the ability of a driver to pay for damages in the event of an accident the driver is found liable for. Different states have different laws when it comes to financial responsibility. 

In the United States, losses from auto accidents are estimated to exceed $150 billion each year. Without insurance, most drivers would fall into bankruptcy or financial hardship after a major vehicle accident. This is why the most common way to prove financial responsibility in the U.S. is to carry your state’s legal minimum auto insurance requirements.

Because of the costs that could result from an auto accident, understanding auto insurance requirements and laws in your state is extremely important. Read through our complete guide to learn what the auto insurance requirements are in your state, and how you can legally provide proof of financial responsibility. 

Prove you are financially responsible by carrying a basic auto insurance policy; compare quotes right now by entering your five-digit ZIP code into our FREE online tool above.

What is proof of financial responsibility?

What is proof of financial responsibility? Financial responsibility means you are able to pay for any damages you are liable for should you ever cause an accident. 

Think about it. If you hit another vehicle, do you have the funds available to pay for the damages and medical expenses for the other driver? Not to mention you also must pay to fix your own vehicle, and any medical needs you or your passengers might have.

Without auto insurance, most Americans would struggle to financially survive a major car accident. To prevent citizens from falling into bankruptcy or financial hardship from an accident, states require all drivers to prove a certain level of financial responsibility in order to legally drive on the roads. 

In most states, you can meet the financial responsibility requirements by carrying a certain level of liability auto insurance, known as a basic auto insurance policy. In other states, you can keep a cash deposit, a surety bond or real estate bond, or even file a government bond with your state to act as evidence of financial responsibility.

What is financial responsibility insurance? Find the level of auto insurance you legally need to carry in your state to prove financial responsibility in the table below.

Minimum Legal Auto Insurance Requirements by State
StateMinimum BI & PD Liability LimitsRequired Insurance Policies
Alabama25/50/25BI + PD Liability
Alaska50/100/25BI + PD Liability
Arizona15/30/10BI + PD Liability
Arkansas25/50/25BI + PD Liability, PIP
California15/30/5BI + PD Liability
Colorado25/50/15BI + PD Liability
Connecticut25/50/20BI + PD Liability, UM, UIM
Delaware25/50/10BI + PD Liability, PIP
District of Columbia25/50/10BI + PD Liability, UM
Florida10/20/10BI + PD Liability, PIP
Georgia25/50/25BI + PD Liability
Hawaii20/40/10BI + PD Liability, PIP
Idaho25/50/15BI + PD Liability
Illinois25/50/20BI + PD Liability, UM, UIM
Indiana25/50/25BI + PD Liability
Iowa20/40/15BI + PD Liability
Kansas25/50/25BI + PD Liability, PIP
Kentucky25/50/25BI + PD Liability, PIP, UM, UIM
Louisiana15/30/25BI + PD Liability
Maine50/100/25BI + PD Liability, UM, UIM, Medpay
Maryland30/60/15BI + PD Liability, PIP, UM, UIM
Massachusetts20/40/5BI + PD Liability, PIP
Michigan20/40/10BI + PD Liability, PIP
Minnesota30/60/10BI + PD Liability, PIP, UM, UIM
Mississippi25/50/25BI + PD Liability
Missouri25/50/25BI + PD Liability, UM
Montana25/50/20BI + PD Liability
Nebraska25/50/25BI + PD Liability, UM, UIM
Nevada25/50/20BI + PD Liability
New Hampshire25/50/25Financial Responsibility only
New Jersey15/30/5BI + PD Liability, PIP, UM, UIM
New Mexico25/50/10BI + PD Liability
New York25/50/10BI + PD Liability, PIP, UM, UIM
North Carolina30/60/25BI + PD Liability, UM, UIM
North Dakota25/50/25BI + PD Liability, PIP, UM, UIM
Ohio25/50/25BI + PD Liability
Oklahoma25/50/25BI + PD Liability
Oregon25/50/20BI + PD Liability, PIP, UM, UIM
Pennsylvania15/30/5BI + PD Liability, PIP
Rhode Island25/50/25BI + PD Liability
South Carolina25/50/25BI + PD Liability, UM, UIM
South Dakota25/50/25BI + PD Liability, UM, UIM
Tennessee25/50/15BI + PD Liability
Texas30/60/25BI + PD Liability, PIP
Utah25/65/15BI + PD Liability, PIP
Vermont25/50/10BI & PD Liab, UM, UIM
Virginia25/50/20BI + PD Liability, UM, UIM
Washington25/50/10BI + PD Liability
West Virginia25/50/25BI + PD Liability, UM, UIM
Wisconsin25/50/10BI + PD Liability, UM, Medpay
Wyoming25/50/20BI + PD Liability
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As you can see, most states require drivers to carry some form of liability coverage. But some states also require medical expense coverage, and some even require uninsured/underinsured motorist coverage.

Of course, not every driver on the road chooses to follow the law. According to the Insurance Information Institute, despite financial responsibility laws existing in all 50 U.S. states, as many as 13 percent of drivers on the road are still uninsured. 

The top three states with the most uninsured motorists are Florida, Mississippi, and New Mexico. The three states with the least amount of uninsured motorists are Maine, New York, and Massachusetts.  

To combat the economic hardships associated with getting hit by an uninsured motorist, some states require drivers to purchase uninsured or underinsured motorist coverage. This type of policy will help cover damages to you and your property that an at-fault, uninsured driver cannot pay for. 

Can proof of financial responsibility replace auto insurance?

In most states, auto insurance will act as your proof of financial responsibility. However, in a few rare states, you can hold a surety bond, cash deposit, estate bond, or even a government bond with your state to act as financial responsibility evidence. 

For example, in the state of Virginia, you can pay an uninsured motorist fee and forgo auto insurance coverage. In California, you can take out a bond for $35,000 to use as a replacement for an auto insurance policy. 

However, watch the following video from eHowFinance to learn why it is easier to just purchase a basic auto insurance policy than it is to take out a bond, even if you live in California.

As you can see, purchasing a bond in California might seem like a good way to forgo auto insurance fees, but in reality, it could end up costing you more than if you simply bought a basic policy in the first place. 

Another auto insurance exception is the state of New Hampshire. If you live in New Hampshire, auto insurance is not legally required at all. However, you must deposit money or other securities with the New Hampshire state treasury if you choose to not purchase an insurance policy. 

You will still be held financially responsible for damages if you cause an accident in any of the states that allow alternatives to auto insurance unless you live in a no-fault state. In a no-fault state, you’re responsible for damages regardless of who is at fault.

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How to Prove Financial Responsibility in Your State

Carrying an auto insurance policy is just one way to prove that you are financially capable of paying for damages caused by an accident you are found at fault for. Some states allow you to keep a minimum amount of money in a surety bond with your state or DMV to use for damages in the event you cause a car accident. 

Remember, proof of financial responsibility in Texas may be different from proof of financial responsibility in California, so always be aware of your state auto insurance requirements to avoid any major issues. This is especially true for folks moving to a new state.

Some other common ways states allow you to prove financial responsibility are by:

  • Keeping a cash deposit with your state.
  • Keeping a surety bond or real estate bond with your state.
  • Filing a government bond with your state.

You can find forms for showing your proof of financial responsibility at the DMV. 

When are you required to provide proof of financial responsibility?

Almost anytime an authority figure asks for your auto insurance information, they are looking to verify your proof of financial responsibility.

Therefore, you will be required to provide proof of financial responsibility whenever you are pulled over for a traffic violation or if you are ever involved in a car accident or moving violation.

If you fail to provide proper proof, you can face fines of anywhere between $500 to $5,000, your license and registration may be revoked, and depending on the state, you could face potential jail time. 

All around, it’s easier and safer to simply carry your state’s most basic auto insurance requirements rather than risk getting caught without valid proof of financial responsibility. 

Depending on your budget and what company you use, you can build a customized auto insurance policy to meet your needs. Consider adding comprehensive or collision insurance, roadside assistance programs, or even additional medical protections. 

Proof of Financial Responsibility and SR-22 or FR-44 Certificates

In some states, you may be required to fill out an SR-22 certificate, an FR-44 certificate, or both, as a means of proving financial responsibility to your state’s DMV. These certificates primarily allow you to register or re-register your vehicle after you’ve committed some type of violation. 

When it comes to an SR-22 form, what is it and why do you need it? An SR-22 certificate is forwarded to your state’s DMV in real-time when you sign up for an auto insurance policy that meets or exceeds your state’s minimum legal requirements. FR-44 certificates, on the other hand, are most often required after committing an alcohol or other substance-related OUI in either Florida or Virginia. 

Remember, these forms are not auto insurance policies, but are instead from your insurance company guaranteeing that you are carrying a policy that meets your state’s minimum requirements.  

You are now caught up on all there is to know about proof of responsibility and how it is connected to your auto insurance policy. 

Although there are several different ways that proof of financial responsibility can be satisfied within your state, the best way is to go ahead and purchase an auto insurance policy. Not only will an auto insurance policy cover costs associated with an accident, but it can also cover expensive legal and medical costs. 

Make sure you’re always able to provide the appropriate level of financial responsibility in your state by carrying the proper level of auto insurance; you can compare quotes right now by entering your five-digit ZIP code into our FREE tool below