Car insurance is not mandatory in all states but all states do have motor vehicle financial responsibility laws. The way in which most people show proof of this required financial responsibility is by purchasing an insurance policy that at least meets the state's minimum requirements.

Starting your own insurance company that only insured yourself is likely not legal but you would have to get professional legal council to find out for certain since they would know your state laws. There are states though, such as Tennessee, that instead of showing liability insurance as the proof of financial responsibility one instead can put up a bond or other assurance of the ability to pay for damages, by proving sufficient assets, if in an accident.

Our Learning Center can be helpful to get a better understanding of Insurance laws.