What is the purpose of the minimum liability limits in state insurance laws?

The purpose of the minimum liability limits in state insurance laws is to ensure victims are compensated in the event of an accident. These limits are established to protect individuals who may be harmed due to another person's negligence. By setting minimum liability thresholds, states aim to guarantee that all drivers carry insurance policies that provide a basic level of protection for others on the road. This is essential in helping cover medical expenses, property damage, and other costs that may result from accidents, thereby promoting financial responsibility among drivers.

Minimum liability limits also serve to encourage accountability and safety on the roads. While there may be other reasons behind various insurance regulations, the primary focus of these minimum limits is to prioritize the welfare of accident victims and facilitate a mechanism for them to receive compensation when they are harmed.