Any resident of Vermont required to have a driver’s license to operate a vehicle must also be able to take financial responsibility should an auto accident take place. More simply, you must be able to prove you could financially cover the cost of damages. To fulfill this financial responsibility law, many residents opt for liability insurance.

Ways to Establish Financial Responsibility

While most go with an insurance policy purchased through a licensed provider, some go with the state’s other options for establishing financial responsibility. Here are the other ways to do so:

• Purchase a surety bond in the same amounts you see below under the "Insurance Requirements" section.

• Prove you are self-insured in the amount of $115,000. You will file this with the Commissioner of Motor Vehicles. It’s possible the Commissioner will require you to produce this type of evidence of financial responsibility before you can get your motor vehicle inspected.

Vermont Liability Insurance Requirements for Private Passenger Vehicles

If opting for liability insurance sounds best to you, be sure you purchase a policy that at least meets the state minimums:

• $25,000 for injury/death to any one person

• $50,000 for injuries/deaths for two or more people

• $10,000 for damages to property in any one accident

These values are commonly referred to as 25/50/10.

Before you decide to buy a specific policy be sure you have researched the various types of coverage. It might be that the value of the assets you wish to protect is high. Therefore, you might want to purchase more coverage than what the state requires to fulfill its financial responsibility law.

After learning about the types of insurance coverage, consider shopping around for a competitive rate. There are numerous providers out there vying for your business.

Proof of Insurance and Financial Responsibility

An insurance company authorized to do business in Vermont will provide you with proof of insurance. It should also immediately file proof with the Commissioner using either a certificate or any computer-generated means acceptable to the Commissioner.

The state requires its drivers to carry an automobile insurance identification card. You can obtain this from your provider, and you should keep it with the vehicle at all times―especially in the following instances:

• When you register your vehicle.

• When you get your vehicle inspected.

• If you are involved in an accident.

• If a law enforcement officer pulls you over (if you don’t have the card at the time you get stopped, you have 15 days to provide the officer with proof).

The card should include:

• The name of your insurance carrier.

• The effective and expiration dates of coverage.

• Your name, as the insured.

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

• The limits of liability (or a statement that your policy covers the minimum liability insurance required by VT law).

If you used another method such as a surety bond to establish financial responsibility, consult the state site for specifics on submitting proof. Depending your circumstances, the state might require you to undergo some fairly specific protocol.

Penalties for Failure to Maintain Financial Responsibility

During the registration process you will show proof of insurance to the DMV. If at any time you allow your coverage to lapse or can show no proof of insurance, you could face a civil traffic citation. Along with the citation comes:

• The required payment of a fine.

• Additional points against your driving privileges or license.

• The requirement to file financial responsibility insurance with the state DMV (see below for more details).

Furthermore, the Commissioner of Motor Vehicles can temporarily revoke your driver’s license if you get caught involved in the following without proper coverage:

• An accident.

• Driving under the influence of alcohol or drugs.

• Fleeing a collision.

• Driving in such a reckless manner that it results in the death of another person.

• Driving while your license is suspended.

Financial Responsibility Insurance

This type of liability insurance covers the individual rather than the vehicle. With financial responsibility insurance, a driver is covered when operating any vehicle regardless of whether he owns the vehicle.

If the state requires you to obtain this type of coverage you must proved proof to the Commissioner of Motor Vehicles and maintain it on file for a minimum of three years. If you let it lapse, your driver’s license and driving privileges will be suspended. Furthermore, you cannot reinstate your license until you have once again filed valid financial responsibility coverage.

The state will only accept certain documents when it comes to filing financial responsibility insurance. An SR-22 certificate is the most commonly known document. If this the route you prefer to take, please note that you must obtain the certificate from your insurance company and not simply your insurance agent.