Financial Responsibility Law

What is 'Financial Responsibility Law'

Financial responsibility law is a law which requires an individual to prove that he or she is able to pay for damages resulting from an accident. A financial responsibility law does not specifically require the individual to have insurance coverage; instead, the law requires the individual to be able to demonstrate the financial capacity to pay, even if the individual is not at fault. This type of law is commonly associated with automobiles.

BREAKING DOWN 'Financial Responsibility Law'

Financial responsibility laws exist because not all states have a compulsory insurance law. However, many states consider an individual with an insurance policy to be compliant with a financial responsibility law, since most insurance policies have a minimum coverage that meets the state standard.

RELATED TERMS
  1. Valued Policy Law - VPL

    A statute that requires insurance companies to pay the full value ...
  2. Financial Responsibility Clause

    A provision within an automobile insurance policy which indicates ...
  3. Natural Law

    A set of rules inherent in human behavior and human reasoning ...
  4. Personal Lines Insurance

    Property and casualty insurance products for individuals that ...
  5. Maritime Law

    A body of laws, conventions and treaties that governs international ...
  6. Say's Law Of Markets

    An economic rule that says that production is the source of demand. ...
Related Articles
  1. Professionals

    Income Tax Law Fundamentals

    Income Tax Law Fundamentals
  2. Economics

    Law Of Diminishing Marginal Utility

    Learn about this law of economics related to consumption.
  3. Professionals

    Career Advice: Investment Banking Vs. Law

    Learn some of the most important differences between a career in investment banking and law, and figure out which career suits you better.
  4. Professionals

    Career Advice: Accounting Vs. Law

    Identify the key differences between working in accounting and working in law. Understand which specific skills make you better-suited for each career.
  5. Professionals

    The Administrator

    North American Securities Administrators Association (NASAA) As the name indicates, NASAA is an organization of securities Administrators. The term "Administrator" is a generic title ...
  6. Professionals

    Standard I-A: Knowledge of the Law

    CFA Level 1 - Standard I-A: Knowledge Of The Law
  7. Professionals

    Blue Sky Laws

    FINRA Series 6 Exam Study Guide - Blue Sky Laws. This section addresses state securities laws, which are called blue sky laws.
  8. Insurance

    How Obamacare Affected The Insurance Industry (AET, CI)

    A look at the past five years shows that far from suffering at the expense of greater health benefits for average Americans, the insurance industry has done extremely well in the new Obamacare ...
  9. Options & Futures

    For Top-Notch Insurance Coverage, Compare Quotes

    Find out how to use and compare policy options to get the best coverage at the best price.
  10. Savings

    4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

    Understand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
RELATED FAQS
  1. Is a person registered for Financial Instruments Business eligible to conduct both ...

    Explore Japan's 2006 Financial Instruments and Exchange Law, and understand how the law affects investment services regulation. Read Answer >>
  2. John King, a CFA, resides in Jurisdiction A, where the securities laws and regulations ...

    The correct answer is d. Since the Law of Locality applies, and King performs his business in Jurisdiction B (where securities ... Read Answer >>
  3. What does the law say about non-U.S. citizens buying stocks of U.S. companies? Are ...

    The law is very fuzzy on the matter of who may own U.S. securities and for what purpose. The U.S. follows the common law ... Read Answer >>
  4. How do sunshine laws help investors?

    Sunshine laws are U.S. federal and state laws that require regulatory authorities' meetings, decisions and records to be ... Read Answer >>
  5. Does the law of diminishing marginal returns only apply to labor?

    Learn more about how the law of diminishing returns is used by economists and businesses. Find out more about the laws of ... Read Answer >>
  6. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center