You should never buy insurance without first doing your research. To some extent, this means researching the various policies that are available. However, you also need to spend some time looking at the laws in your area. You need to know what the law has to say about insurance so that you can get the policies that are required. In fact, it is a good idea to think about the five following insurance laws even if you were not planning to buy coverage.

Auto Insurance is Mandatory

You do not have a choice when it comes to buying auto insurance. In order to protect the other drivers on the road, a law has been created that states that you must have insurance if you own a car that you are operating. If you do not, you will be driving illegally. When you are pulled over, you will then have to provide a proof of insurance to the office, and your car can be impounded if you do not have one. It is important to note that you can own a vehicle, such as a collector’s car, without insurance; you just cannot use it.

Employee Insurance Obligations

If you own a business that has employees, you are obligated by law to pay for at least two different types of insurance. These are unemployment insurance and workers’ compensation insurance. The government made these mandatory to make sure that business owners can pay if their employees are injured in the workplace or if employees had to be laid off due to low profits. Since money is offered to employees in both of these situations, the government wanted to make sure that businesses could not claim that a lack of funding was preventing them from giving people the money that they needed.

Insurance Fraud is Illegal

Every now and then, people realize that they can get more money through an insurance policy than they will lose if something like a house or a business is destroyed. They then destroy that building on their own, often through a fire or a similar event, to collect the money. This is known as insurance fraud and it is highly illegal. The policy is in place to protect your building if there is an accident. If you are the cause of the accident, you will violate the policy and you could face fines and jail time.

Laws Concerning DUI Convictions for Drivers

While the laws about drivers who have been convicted of DUIs are different from state to state, it is a good idea to take a look at the specific laws in your area. You still need to get insurance if you are going to drive again, but the insurance companies may not give you a policy since you are a high risk. As such, the law dictates that you may need to get a special policy, which is sometimes called SR-22 insurance, in order to be allowed to drive legally.

Insurance Companies Must be Honest

Finally, as a potential purchaser of a policy, you should know that the law states that insurance companies must be honest and forthcoming when they are selling you a policy. They cannot tell you that you will be covered in a certain situation in which you will actually not be covered. This is to prevent fraud by those companies. It is wise to sit down and go over all of the paperwork before agreeing to anything. That paperwork will truly reflect your policy since the law is on your side, creating honesty in the insurance market.

Author Bio: Adam Stern is a writer who produces law related articles. This article aims to shed light on important insurance laws and to promote further study in this area by studying in California Law Schools.