For those who own or lease a vehicle in Massachusetts, the state requires a minimum amount of liability insurance coverage. That’s because part of being allowed to drive on public ways means being able to take financial responsibility should an auto accident take place. Even before an accident occurs, you must prove you could financially cover the cost of property damages or injury.

Ways to Establish Financial Responsibility

There is only one way to establish financial responsibility in this state, and that is by obtaining the minimum levels of motor vehicle insurance. You can purchase a liability policy (and more) through an authorized Massachusetts insurance agent.

Massachusetts Liability Insurance Requirements for Private Passenger Vehicles

The state minimums for Massachusetts drivers are as follows:

• Part One: Bodily injury to others―Minimum $20,000 per person, $40,000 per accident

• Part Two: Personal injury protection―Pays up to $8,000 to you, passengers, pedestrians, or anyone you allow to drive your vehicle

• Part Three: Bodily injury caused by an uninsured auto―Minimum $20,000 per person, $40,000 per
  accident

• Part Four: Damage to someone else’s property―Minimum $5,000 for property damage

As of April 2008 the state swapped the old fixed-and-established system for one that involves managed competition. So today, residents can shop around for competitive rates.

It is a good idea to start by researching the various types of coverage. Determine whether the value of the assets you wish to protect is high, and then whether it makes sense for you to purchase more coverage than what the state requires to fulfill its financial responsibility law.

After getting familiar with the types of coverage out there, your experience shopping around for the best rate will be easier.

Merit Rating Plans

Now that the state replaced the old fixed-and-established system with managed competition, insurance companies authorized to business in Massachusetts are not required by law to apply certain surcharges for specific traffic violations and auto accidents.

Today insurance providers can develop their own merit rating plan―and therefore adjust your premiums based on your driving record―by setting surcharges and credits as a part of the Safe Driver Insurance Plan.

Under the new system providers can determine whether they will impose surcharges for traffic violations and at-fault accidents (defined in the last section of this page) and apply good-driving discounts.

However they cannot use at-fault accidents or traffic violations against you that took place more than six years prior to the policy effective date. They also cannot increase your premium for at-fault accidents or traffic violations you accumulated on your record for more than five years.

Safe Driver Insurance Plan

The state does not require insurance providers to develop their own merit rating plan if they prefer to adopt the existing Safe Driver Insurance Plan instead. It rewards lower premiums to drivers with clean driving records, and it increases premiums for those who have received traffic violations or have been involved in an at-fault accident (defined in the last section of this page).

You can learn more about this plan by visiting the Merit Rating Board online or by calling (617) 351-4400.

Proof of Insurance and Financial Responsibility

Your insurance company will provide you with proof of insurance. For example, when you apply for registration your authorized Massachusetts insurance agent will fill out, stamp, and sign an RMV-1 form (application).

In addition to displaying the names of the insurer and the insured, the proof of coverage provided by the insurance company should include details on:

• The effective and expiration dates of coverage.

• Your vehicle’s description, including the identification number.

• The limits of liability (or a statement that your policy fulfills the state’s minimum liability insurance requirement).

Keep your proof of insurance with the vehicle at all times. That way if you get into an accident or law enforcement pulls you over, you will be prepared to show proof of financial responsibility.

Penalties for Failure to Maintain Financial Responsibility

If at any time you let your insurance coverage lapse or have no proof of insurance, you could face a traffic citation. Currently with this fairly new managed-competition system, violations such as these could mean an increase on you insurance premium. A provider will adjust what you pay for the policy depending on:

• Your driving record.

• The number and severity of at-fault accidents you were involved in (see below).

• Your traffic violations.

At-Fault Standards

Insurance providers must report at-fault accidents and out-of-state driving records to the Merit Rating Board; it’s the agency that maintains driving records. For more info on surchargeable incidents see page 139 of the Driver Manual or visit the MRB online .

The state’s at-fault standards include:

• You collide with a lawfully or an unlawfully parked vehicle.

• You rear-end another vehicle.

• You have an out-of-lane collision.

• You fail to signal.

• You fail to proceed with due caution from a traffic control signal or sign.

• You have a collision on the wrong side of the road.

• You operate your vehicle in the wrong direction.

• You collide at an uncontrolled intersection.

• You collide while backing.

• You collide while making a left turn or a U-turn across the travel path of a vehicle traveling in the same or opposite direction.

• You collide while leaving or exiting a parked position, a parking lot, an alley or a driveway.

• You cause damage with an opened or opening vehicle door(s).

• You have a single-vehicle collision.

• You fail to obey driving rules and regulations.

• You are involved in an unattended vehicle collision.

• You collide while merging onto a highway or into a rotary.

• You are a noncontact operator who causes a collision.

• You fail to yield right-of-way to emergency vehicles when required by law.

• You collide at a "T" intersection that you entered from a side road.

If you have additional questions regarding liability coverage, consult the Division of Insurance Consumer Service Unit online or by phone at (617) 521-7777.