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Do you need to purchase auto insurance liability in your state? (Most likely, yes)

auto insurance liability states

Driving without auto insurance can get you in a lot of trouble in most states. You can be fined, lose your driver's license or even be jailed.

But if you live in New Hampshire, you're in luck. It's the only state without laws mandating that drivers buy at least the minimum amount of auto liability insurance -- the most basic type of car insurance available. Auto liability insurance helps protect you in case you harm a person or property while driving your car.

What are the auto liability limits in my state?

In New Hampshire, though you aren't required to buy auto insurance, you must be able to prove you're financially responsible enough to pay for damage (out of your own pocket) if you cause an auto accident.

If you can't, you may lose your driving privileges, according to the State of New Hampshire Insurance Department.

In all the other states, as well as Washington, D.C., auto insurance is mandatory, although there is wiggle room in some places as long as you can show you can pay for any damage you cause. That typically means you'd better be rich. Or own a lot of cars.

For instance, if you don't want to buy auto insurance in Iowa, you can have a $55,000 bond on file with the Department of Motor Vehicles, says Chance McElhaney, a spokesman for the Iowa Insurance Division. That money is meant to cover payment for damage caused by the driver who's at fault in an accident.

Likewise, if you really don't want to bother with auto insurance companies in California, you can do a couple of things: Put down a cash deposit of $35,000 with the Department of Motor Vehicles, or get a certificate of self-insurance from the DMV if you own a fleet of at least 25 vehicles (translation: you run a car sales lot).

It's basically the same scenario in Washington, where you either can plunk down $60,000 or prove that you own at least 26 vehicles in order to self insure.

In Ohio, you'll have to present at least a $30,000 cash bond or own at least 26 vehicles.

You don't have to own a car lot to prove financial responsibility in states like Arizona and Wyoming, but you'd better have a nice bundle of money that the state can stash away. The cost to skip auto insurance in Arizona is $40,000; in Wyoming, it's $25,000.

What happens if you don't get auto liability insurance?

If you don't have auto insurance or prove financial responsibility, the consequences can be harsh. In Pennsylvania, for example, you can face a $300 fine and a three-month license suspension for failing to have liability insurance. According to a 2013 study by the Consumer Federation of America, 20 states allow jail sentences for failing to have the required auto insurance.

Luckily, most drivers don't have to worry about the consequences since they typically wind up buying at least the minimum amount of auto liability insurance.

In Ohio, for instance, almost 11 percent of Ohio drivers were found to be uninsured or not in compliance with financial responsibility laws between 2005 and 2013, says Mary Bonelli, a spokeswoman for the Ohio Insurance Institute.

The percentage of uninsured Ohio drivers falls in line with data from the Insurance Research Council (IRC), which found the nationwide percentage of uninsured motorists was 12.6 percent in 2012, down from 14.9 percent in 2003.

One of the biggest reasons some people don't buy auto insurance is because they can't afford it, the IRC report found.

However, the majority of Americans choose to buy auto insurance rather than plunking down thousands of dollars to satisfy financial responsibility laws or take the chance of having a license suspended.  

"Even in the absence of a mandate, the overwhelming majority of people have gone out and purchased auto insurance," says Michael Barry, a spokesman for the Insurance Information Institute.

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