Each state requires its drivers to provide some sort of proof of financial responsibility. That's because driving is risky, and accidents can cause a staggering amount of expenses. Allowing individuals to drive without some sort of assurance that they're prepared to deal with such costs would be irresponsible.

Ways to Establish Financial Responsibility

Wisconsin requires that you prove your financial responsibility by one of these methods:

• Carrying auto liability insurance that meets the state's standards.

• Placing a cash deposit of $60,000 or filing a bond with the Wisconsin Department of Transportation (WisDOT).

Wisconsin Liability Insurance Requirements for Private Passenger Vehicles

For most residents, purchasing an auto liability policy is the only viable means of complying with the state's standards. Your policy limits must at least meet the following:

• $25,000 of coverage for injuries or death occurring to one person in a single accident.

• $50,000 of coverage for injuries or deaths occurring to more than one person in a single accident.

• $10,000 of property damage coverage.

While having this level of insurance coverage allows you to be in compliance with WisDOT, most financial professionals advise having much more protection; we explain why in our Types of Coverage section.

Shopping around is the best way to keep insurance premium costs in check, and afford these higher protection levels. It's simple to do this online, but it's also easy to get quotes by calling insurance companies on their toll-free numbers.

Proof of Insurance and Financial Responsibility

In order to prove to WisDOT that you carry the proper insurance, you'll first need to file a SR-22 form with your insurance company. Your provider will then notify the state electronically or through the mail, or it may just give you a copy of the completed form to show to WisDOT.

Penalties for Failure to Maintain Financial Responsibility

What if you're in an accident and have no proof of insurance?

WisDOT will investigate the matter, and may suspend your license and your registration. You'll then have to comply with one of several safety responsibility options, pay the associated fees ($50 for license, $60 for registration), and complete the registration reinstatement form to reinstate your license and registration.