Iowa doesn't have a compulsory insurance law. Instead the state's Financial and Safety Responsibility Act requires that if you cause injury or property damage to others you have the financial means to cover the incident.
The easiest way to show financial responsibility is with an auto insurance policy. If using this method, Iowa drivers must buy a minimum of $20,000 per person and $40,000 per accident for bodily injury liability and $15,000 of property damage liability.
Those limits are on the low side. If you have savings and a home you'd like to protect, think about going even higher, such as 100/300/50.
Alternatives to insurance: If you don't purchase an Iowa auto insurance policy, Iowa Code also defines financial liability coverage as including:
- a bond
- filing a certificate of deposit with the treasurer of state ($55,000); or
- a valid certificate of self-insurance.
Proof of financial responsibility is still needed: Iowa code 321.20B requires that proof of financial responsibility be provided to a peace officer upon request. If you are unable provide proof, the officer may cite you. Officers also have the authority to remove your plates and registration and even impound your vehicle.
After an accident: The Iowa Department of Transportation explains that if you're in an accident where damages or injuries of the other party exceed $1,500, and you're unable to immediately provide proof of financial responsibility, your driving and registration privileges will be suspended.
Accident surcharge: In Iowa, an insurer can impose a surcharge on you for accidents you were involved in for the past five years. The rate increase will vary by company, so it pays to shop around if you've been in an accident.
Cancellation: For the first 60 days your Iowa insurance company can cancel your policy for any reason. After 60 days, the policy may only be cancelled for the specific reasons outlined in your policy.
Pay on time: The Hawkeye State's insurance law doesn't give you a grace period for paying your car insurance premiums. Pay on or before your due date or you risk losing your coverage.
Negligence law: If you're in an accident, be aware of Iowa's "modified comparative negligence law." That means drivers in an accident could both be found partially at fault. The threshold in Iowa is 51 percent: If you are 51 percent or more at fault, you will not be able to make a claim for damages from other party's auto insurance company.