A "financial responsibility" law requires you to prove your financial ability to pay for damages at the time you are involved in an accident or are convicted of a traffic violation. This type of law does not require that you have insurance or other proof of financial responsibility at the time of vehicle registration. However, failure to demonstrate the required level of financial responsibility at the time of an accident or traffic violation can result in suspension of your driver's license or revocation of your vehicle registration. Under these laws, the requirement to demonstrate financial responsibility is not based on fault. All parties involved in an accident must show the necessary proof or face the penalties imposed by the law. Maintaining an automobile insurance policy is the most common way to comply with a financial responsibility law.
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