Financial Responsibility Clause

Any drivers out there who transferred an automobile insurance policy from one state to another probably found out real quick that different states have different laws on insurance coverage provisions…and this can affect how much we pay. For example, some states require drivers to carry uninsured motorist coverage, and some do not. Some states have lower minimum coverage amounts than others. Some states require comprehensive collision coverage while others only require liability coverage. And on and on.

But no matter where we live, no matter where we drive, and no matter where our car is insured, we always have to have at least the minimum amount of coverage required by that state. The “financial responsibility clause” is part of our insurance policy, and it states that our insurance company promises that our policy always meets or exceeds those minimum standards, even if we happen to be driving through a state with different requirements from our own. It’s a pretty good deal, and the best part is that it’s already there, hiding deep within our auto insurance policy and waiting for its time to shine.