Many states require drivers to have automobile insurance.
Even if not required, automobile insurance is necessary since the cost of some losses is likely to exceed the net worth of individuals. There are many different types of policies, and policyholders may elect among a number of options when buying automobile insurance. Not having automobile insurance exposes you to tremendous financial risks because of the high costs of property, medical care, and lawsuits. In states with no fault automobile insurance systems it doesn't matter who caused the accident. Each insurance company pays for the property damage and medical expenses of its policyholders according to the terms of the policy.