New Hampshire Financial Responsibility Laws

New Hampshire stands alone among all 50 U.S. states with its distinctive approach to auto insurance—making this THE MOST HEAVILY TESTED topic on the NH P&C state law exam.

The New Hampshire Exception

No Mandatory Auto Insurance

CRITICAL FACT: New Hampshire is the ONLY state that does NOT require auto insurance.

Why New Hampshire is Different

"Live Free or Die" Philosophy:

• State trusts citizens to make responsible decisions
• Emphasizes personal freedom and choice
• Requires responsibility AFTER incidents, not before
• Maintains strong penalties for non-compliance

Exam Tip: New Hampshire's lack of mandatory auto insurance is the MOST IMPORTANT concept on the state law exam. Expect 5-10 questions on this unique system. Understand WHY it exists, WHEN insurance becomes mandatory, and HOW the system works.

Financial Responsibility Requirements

The 25/50/25 Standard

When proof of financial responsibility is required, New Hampshire mandates the ability to pay:

Written as: 25/50/25

Example Scenario:

• Driver causes accident injuring 3 people
• Person 1 injuries: $30,000
• Person 2 injuries: $20,000
• Person 3 injuries: $15,000
• Property damage: $10,000

25/50/25 Coverage Pays:

• Person 1: $25,000 (limit per person)
• Person 2: $20,000 (full amount)
• Person 3: $5,000 (remaining from $50,000 per accident limit)
• Property: $10,000 (full amount)

Total Paid: $60,000 under 25/50/25 limits Driver Personally Liable For: $15,000 (Person 1: $5,000 + Person 3: $10,000)

Exam Tip: The per-person limit ($25,000) applies to EACH injured person, but the per-accident limit ($50,000) is the TOTAL for ALL injured persons combined. Once the $50,000 is exhausted, the at-fault driver is personally liable for excess amounts.

When Financial Responsibility Proof is REQUIRED

Triggering Events

Financial responsibility proof becomes MANDATORY after:

Accident Reporting Requirements

Must Report Accident If:

• Bodily injury to any person, OR
• Death, OR
• Property damage exceeding $1,000

Reporting Process:

1. Report to police immediately if injuries/death
2. Submit written report to DMV within 15 days
3. DMV reviews for fault determination
4. If at fault, must prove financial responsibility
5. License suspended until proof provided

Judgment Against Driver

If Sued and Lose:

• Must pay judgment within 30 days, OR
• Prove financial responsibility for future, OR
• Face license suspension

Financial Responsibility Required For:

• Amount of judgment
• Minimum 25/50/25 for future accidents
• Duration: Until judgment paid + 3 years

Exam Tip: New Hampshire requires accident reporting within 15 days if bodily injury, death, or property damage exceeds $1,000. At-fault drivers must prove financial responsibility before license reinstatement.

Methods of Proving Financial Responsibility

Method 1: Insurance Policy

Most Common Method:

• Purchase auto liability insurance
• Minimum 25/50/25 coverage
• Policy issued by licensed insurer
• Continuous coverage required

Insurance Certificate Filed With:

• New Hampshire Department of Motor Vehicles
• Electronic reporting by insurer (SR-22 if required)

Method 2: Surety Bond

How It Works:

• Surety company posts bond
• Minimum $75,000 bond amount
• Guarantees payment of claims up to bond amount
• Bond filed with state treasurer

When Used:

• Self-employed individuals
• Those unable to obtain insurance
• Preference for bond over insurance

Cost: Annual premium (percentage of bond amount)

Method 3: Cash Deposit

How It Works:

• Deposit cash or securities with state treasurer
• Minimum $75,000 deposit
• Held as guarantee for claims
• Returned when no longer required (minus claims paid)

When Used:

• Wealthy individuals
• Foreign nationals temporarily in NH
• Those unable to obtain insurance or bond

Disadvantage: Ties up large amount of capital

Method 4: Self-Insurance

For Large Organizations:

• Fleet operators, municipalities, large corporations
• Prove financial capacity to self-insure
• Must maintain minimum net worth
• Annual financial statements required

Requirements:

• Net worth exceeding $1 million (typically)
• Approval from Insurance Commissioner
• Annual financial reporting
• Immediate claims payment ability

Comparison of Methods

Exam Tip: While New Hampshire allows four methods of proving financial responsibility, 95%+ of drivers use traditional auto insurance. Bonds ($75,000 minimum) and cash deposits ($75,000 minimum) are alternatives for those who cannot obtain or prefer not to purchase insurance.

SR-22 Certificate of Financial Responsibility

What is SR-22?

SR-22 is:

• Certificate of insurance filed with DMV
• Proves driver carries required liability coverage
• Electronic filing by insurer to state
• Required for high-risk drivers

SR-22 is NOT:

• A type of insurance policy
• More expensive coverage
• Separate from regular policy
• Available from all insurers

When SR-22 is Required

Mandatory SR-22 Situations:

SR-22 Requirements

Coverage Minimums:

• Must meet 25/50/25 minimums (often higher required)
• Continuous coverage for required period
• No lapse or cancellation allowed
• Insurer reports lapses electronically to DMV

Insurer Obligations:

• File SR-22 electronically with DMV
• Notify DMV immediately of:
  • Policy cancellation
  • Non-renewal
  • Lapse in coverage
  • Coverage changes below required minimums

DMV Action on Lapse:

• Automatic license suspension
• Registration suspension
• Must obtain new SR-22 to reinstate
• Additional penalties may apply

SR-22 After DWI

DWI Consequences in New Hampshire:

SR-22 Period:

• Begins on conviction date
• Continuous for 3 years
• Any lapse restarts 3-year period
• Cannot be terminated early

Example Timeline:

• DWI conviction: January 1, 2026
• License suspended: January 1, 2026 (minimum 9 months)
• License reinstated: October 1, 2026 (with SR-22)
• SR-22 required until: January 1, 2029 (3 years from conviction)
• Must maintain SR-22 for additional 2+ years after reinstatement

Exam Tip: SR-22 is required for 3 years AFTER DWI conviction—not 3 years after license reinstatement. The 3-year period begins on conviction date, meaning drivers must maintain SR-22 for years after they regain driving privileges.

Consequences of Driving Without Financial Responsibility

Initial Violation

First Offense:

• $1,000 fine minimum
• License suspension until proof provided
• Vehicle registration suspension
• Impoundment possible
• SR-22 required for 3 years after reinstatement

Subsequent Violations

Repeat Offenses:

• Increased fines ($1,000+ per offense)
• Extended license suspension
• Possible jail time (up to 1 year)
• Vehicle impoundment
• Habitual offender designation

Accident While Uninsured

If Uninsured and At Fault:

• Personally liable for ALL damages
• No coverage for own injuries/vehicle
• Must pay judgment or face bankruptcy
• License suspended until judgment paid
• Criminal penalties for driving after suspension
• SR-22 required for 3 years

Financial Exposure:

• Medical bills (can exceed hundreds of thousands)
• Property damage (vehicles, structures, etc.)
• Legal fees and court costs
• Lost wages of injured parties
• Pain and suffering awards

Driving After Suspension

Criminal Offense:

• Separate criminal charge
• Additional fines ($500-$2,000)
• Possible jail time (up to 1 year)
• Extended suspension period
• Vehicle impoundment/forfeiture
• SR-22 required for 3 years after reinstatement

Exam Tip: Penalties for driving without financial responsibility are severe in New Hampshire—$1,000 fines, license suspension, and personal liability for all accident damages. The state compensates for no upfront insurance mandate with strict enforcement after incidents.

Uninsured Motorist Coverage

The New Hampshire Challenge

Higher Uninsured Rates:

• No mandatory insurance = more uninsured drivers
• Estimated 8-12% of NH drivers uninsured
• National average: 3-5% in mandatory states
• Higher risk of being hit by uninsured driver

What is UM/UIM Coverage?

Uninsured Motorist (UM):

• Covers injuries caused by uninsured drivers
• Protects you when at-fault driver has no coverage
• Pays medical bills, lost wages, pain/suffering
• Up to your UM policy limits

Underinsured Motorist (UIM):

• Covers injuries when at-fault driver has INSUFFICIENT coverage
• Pays difference between their limits and your damages
• Example: They have 25/50, you have 100/300 UM
• UIM pays up to $75,000 per person (difference)

New Hampshire UM/UIM Requirements

New Hampshire Law REQUIRES:

• Insurers must OFFER UM/UIM coverage
• Coverage must equal liability limits purchased
• Consumers may REJECT in writing
• Rejection must be informed and documented

Coverage Offer:

Rejection Requirements

To Reject UM/UIM:

• Must reject in writing on specific form
• Rejection form explains coverage importance
• Must be signed by named insured
• Cannot be pre-printed on application
• Rejection valid for policy term only

Insurer Must:

• Offer UM/UIM each policy period
• Explain coverage clearly
• Document rejection properly
• Maintain rejection forms

Consumer Protection:

• Can accept UM/UIM at any renewal
• Rejection not permanent
• Can purchase lower UM than liability (but not recommended)

Exam Tip: New Hampshire REQUIRES insurers to offer UM/UIM coverage equal to liability limits. Consumers may reject in writing, but rejection must be informed and documented. This protects NH residents from the state's higher uninsured driver rate.

New Hampshire Auto Insurance Coverages

Required Disclosures

When Selling Auto Insurance, Producers Must:

• Explain New Hampshire's unique voluntary system
• Discuss financial responsibility requirements
• Strongly recommend UM/UIM coverage
• Explain rejection consequences
• Provide written rejection forms if declining UM/UIM
• Document all coverage discussions

Recommended Coverages

Beyond 25/50/25 Minimum:

Personal Injury Protection (PIP)

New Hampshire Does NOT Require PIP:

• No-fault states require PIP
• New Hampshire is tort-based system
• PIP available as optional coverage
• Covers medical regardless of fault

PIP Benefits:

• Medical expenses
• Lost wages
• Essential services
• Funeral expenses
• Disability benefits

Advantages:

• Faster payment (no fault determination needed)
• Covers family members
• Coordinated with health insurance
• Reduces small claims

Out-of-State Accidents

New Hampshire Residents in Other States

Coverage Follows Vehicle:

• NH policy covers you in all 50 states
• Meets minimum requirements automatically
• Other state's laws apply to accident
• No additional coverage needed

Minimum Limits Clause:

• NH policy automatically provides other state's minimums
• If other state requires 50/100/50, your policy provides it
• No additional cost
• Applies only while in that state

Out-of-State Drivers in New Hampshire

Visitors to NH:

• Must comply with their home state requirements
• Home state insurance covers them in NH
• If accident, NH financial responsibility laws apply
• May be required to prove financial responsibility if at fault

Moving to NH:

• Residents must register vehicles in NH
• May continue with out-of-state insurance initially
• Should obtain NH policy
• Subject to NH financial responsibility laws

Exam Tip: New Hampshire auto policies automatically provide other states' minimum required coverage through the "minimum limits clause." NH residents traveling out of state are covered at the destination state's minimum levels, even if higher than their NH policy.