• Your auto policy contains responsibilities for you and your insurance company.auto documents image by Aleksandr Lobanov from Fotolia.com
  
  Automobile insurance is a contract agreement between two parties: the insurance company and you, the insured. Each has responsibilities defined and outlined by the policy in the event of a claim. In addition, you are both responsible for obeying state laws pertaining to automobile insurance. Each state and company has different laws and guidelines. But there are several responsibilities that are common to most areas.
  
  

Financial Responsibility

• Liability insurance is a must before driving your car.car image by Muhammad Umair Tahir from Fotolia.com
  
  Liability auto insurance is required in all 50 states for all drivers. Laws describing the minimum amounts of insurance required are called financial responsibility laws. You must obtain auto insurance if you desire to drive a vehicle. Some states offer alternatives to insurance, such as a bond or cash deposit with the state treasurer.
  
  

Reporting Responsibility

• Some states track uninsured drivers with electronic databases.yellow car, a honda japanese sport car model image by alma_sacra from Fotolia.com
  
  Some states, like California, now require auto insurance companies to electronically report all policy sales, lapses, cancellations and renewals to the state's Department of Motor Vehicles in order to track uninsured drivers. Your insurance company is responsible for fulfilling this requirement.
  
  

SR-22 Responsibility

• An SR-22 is a court-mandated endorsement on auto insurance policies for high-risk drivers. If you are required to carry an SR-22 for any reason, you are responsible for alerting your insurance company of this need and it is responsible for filing the endorsement with the state.
  
  

Policy Conditions

• Each auto insurance policy has a section called conditions that specifically outlines what you and your insurance company are required to do. You must pay your agreed-upon premium, for example, and the company must respond to your claims within a certain amount of time by paying for losses as defined in the policy.
  
  

Contractual Responsibilities

• The entire auto insurance policy is a contract defining how an insurance company must act when you file a claim. For example, if your policy has a property damage liability limit of $50,000, your insurance company must pay all legitimate claims made against you for damage you cause to other people's property up to a maximum of $50,000. The company cannot decline to pay for damages until it pays out the maximum figure. Accordingly, it also cannot pay more than the maximum figure, so if you cause $70,000 of damage with a $50,000 policy, you will be responsible for the extra $20,000.
  
  

Notice Responsibilities

• Each state has its own requirements for insurance companies notifying their clients of policy cancellations and non-renewals. In Illinois, an auto insurer must alert its customers at least 30 days in advance of a non-renewal if the policy has been in force for five years or less, and 60 days in advance for policies in force for more than five consecutive years. It is the insurance company's responsibility to follow these state prescriptions or the non-renewal may not be legal.