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  • What Does “Compulsory” Mean?
June 21, 2025

What Does “Compulsory” Mean?

What Does “Compulsory” Mean?

by admin / Friday, 12 August 2011 / Published in Auto Insurance Premiums

This question comes up a lot… “What does compulsory mean?”

In short, it means the minimum acceptable amount of insurance as dictated by your state of residence. In other words, if talking about auto insurance (which is typical) compulsory is the bare minimum insurance coverage for you to be allowed to legally operate your vehicle.

Typically, compulsory coverage can be loosely considered a minimum damage protection policy to pay for damages if you injure another person or damage property with your vehicle.

Please note that compulsory coverage is a mandated minimum amount of insurance that changes from state to state and should not be considered the recommended amount of coverage, but rather just enough to be legal.

Of course, compulsory insurance coverage applies to more than auto insurance. It affects business policies as well. For example, if you operate an engineering firm , you may find that “E&O” or “errors and omissions” insurance is required in order to practice.

Basically, the term “compulsory” as it relates to insurance can describe any type of legal insurance policy minimum. That said, this is the minimum and not the ideal amount of coverage. So when it’s time to explore that new policy, if you are thinking of doing just compulsory, take a few minutes and compare the difference between that and the policy recommended by your agent. Often times the price difference is minimal but the value from enhanced protection will always be exceptional.

Just think of it this way… If something did ever go wrong, would you want the barest minimal assistance to help you out of the jam?

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