Iowa is an unusual state in that there is no mandatory insurance requirement. This does not mean, however, that there is no financial responsibility law in place. Rather than requiring that residents carry a minimum amount of car insurance, Iowa approaches the handling of responsibility after an accident differently.
Financial and Safety Responsibility Act
Under the Financial and Safety Responsibility Act, Iowa drivers must show proof of financial responsibility within 72 hours after an accident where damage totals more than $1500, or where there are injuries or a fatality. Failure to do so will result in penalties:
- Suspension of vehicle registration
- Suspension of driver’s license
Thus, while you do not have to meet any specific minimum requirement for car insurance in Iowa, you do in fact have to be able to present proof of financial responsibility, which for most people is provided in the form of liability insurance.
Drivers in Iowa can also choose to prove responsibility after an accident by:
- Posting cash, certified check, a cashier’s check, a bank draft, or a money order payable to Iowa’s Driver Services
- Filing an agreement with other parties involved in the accident outlining a payment plan
- Filing evidence that all damages have been settled
- Execution of a warrant for confession of judgment including a payment plan agreement
You can also be absolved of responsibility by:
- Providing releases from all other involved parties who might be owed damages
- Being relieved of liability by judgment in a civil court
There are three situations in which the financial responsibility laws do not apply and you will not be required to provide proof:
- If the accident occurred while your vehicle was legally parked or stopped
- If the vehicle was used without your knowledge or permission
- Damages were only done to you and your property, and no one else was involved
Under Iowa law, both the driver and the owner of the vehicle, if they are different, must show proof of financial responsibility after an accident.
Mandatory Insurance After OWI Violation
Anyone who has their license suspended as the result of a violation of the OWI (Operating While Intoxicated) law in Iowa will be subject to mandatory insurance or financial responsibility requirements. Most drivers satisfy this requirement by obtaining an SR-22.
The SR-22 is filed by an insurance company on behalf of that driver stating that a liability policy is in place, and Driver Services will be notified if the policy lapses or is canceled. There are a few other methods of satisfying the financial responsibility requirement:
- Place $55,000 in a surety bond, cash, or securities on file
- Your employer can file an SR-22 from their insurance company if the driver is using a company car
- A self-insured employer can provide the driver with proof of self-insurance
The proof of financial responsibility will only allow driving privileges for the vehicle that is covered under the policy, and driving any other vehicle is not permitted.
Car Insurance Options in Iowa
Although the law does not technically require it, most Iowans choose to carry an auto insurance policy to both protect themselves from the high cost of a car accident and be prepared to comply with financial responsibility laws in the event of an accident.
A full range of insurance options is available to Iowa drivers:
The main part of any insurance policy and the part that allows compliance with the law is liability coverage, which comes in two parts:
- Bodily injury liability pays for injuries or death occurring in an accident for which the insured driver is at fault
- Property damage liability pays for damage to another person’s vehicle or other property in an at-fault accident
Comprehensive and Collision Coverage
These two coverage options are usually sold together and provide protection for the driver’s own vehicle.
- Collision coverage pays for damage to the insured’s vehicle in the event of an at-fault accident or a single-vehicle accident
- Comprehensive coverage pays for all damages that are caused by non-collision causes such as theft, vandalism, and weather
This coverage pays for medical needs resulting from an accident for you or anyone in your vehicle, and may also cover people in your household injured as a pedestrian.
Other available coverage options include rental reimbursement coverage to pay for a rental car during a covered claim, towing and labor coverage, and gap coverage to make up the difference between the amount owed on a vehicle and what it is worth in an accident.
Shopping for Car Insurance in Iowa
Iowa has some of the most affordable auto insurance rates in the country, ranking 46th in the country in a 2017 Insure.com study of rates. Their annual average premium policy was $1017, compared to the national average of $1318. This is likely due to the fact that there is no mandatory insurance requirement in the state, which means insurance companies need to compete to offer better rates to a population of drivers who aren’t required to purchase their products.
The Iowa Insurance Consumer Advocate Bureau provides information to assist Iowa drivers in purchasing car insurance and comparing rates, including an auto insurance pricing guide.
Insurance rates in Iowa are determined based on a variety of factors, including driving record, type of vehicle, how the vehicle is used, and where the driver lives. Among all of the factors affecting rates, driving record is usually the most important, with good drivers qualifying for the best rates.
High-Risk Drivers in Iowa
High-risk drivers have some of the highest insurance rates and may have difficulty finding a policy on the open market. Whether seeking insurance to protect against financial risk or because an SR-22 has been required, high-risk drivers may sometimes require assistance obtaining a policy.
Iowa participates in an assigned risk program for high-risk drivers. The Iowa Automobile Insurance Plan assigns each driver to an insurance company that must provide a policy regardless of driving record. Every insurance company in the state must participate; allowing the risk to be spread across multiple companies while ensuring everyone has access to insurance.
Teen Driver Licensing
Teen drivers in Iowa must go through a multi-stage program in order to obtain a driver’s license. There are three main stages to the program, and one (optional) intermediate stage.
Iowa teens can obtain an instruction permit at the age of 14 to allow them to begin practicing behind the wheel with a supervising driver. That driver can be:
- A parent or guardian, or family member over the age of 21
- A driving instructor
- A licensed driver over the age of 25 who has been authorized by a parent or guardian in writing
Minor School License
Iowa allows teens to obtain an optional restricted license at the age of 14 years and 6 months, which allows very limited unsupervised driving to and from school. Teens can obtain this license when:
- They have completed a driver education course
- They have held an instruction permit for at least 6 months with a clean driving record for at least 6 months
- They live at least 1 mile away from school
- The school has signed an affidavit and pass a test if requested
With the Minor School License, teens can drive at any time with a supervisor meeting the same requirements as for the permit, but may also drive unsupervised under the following circumstances:
- Driving to and from the school at which they are a registered student
- Driving to and from another school in accordance with pre-arranged agreements for extracurricular activities
- Driving to and from the closest gas station on the route between home and school
- Drive to and from the nearest bus stop
Restrictions on this license are:
- Driving unsupervised is not permitted between 10 p.m. and 5 a.m.
- Only one passenger who is a minor can be in the car when driving unsupervised, except for family members
- Mobile devices can not be used at any time
Teens can proceed to the Intermediate License at the age of 16, as long as they have held a permit, and minor school license (if selected) for at least 12 months and have a had a clean driving record for the last 6 consecutive months. The teen must also complete 20 hours of practice time as well as completing a driver education course, with 2 hours of practice at night.
Restrictions on the Intermediate license are:
- Driving is not permitted between 12:30 a.m. and 5 a.m., unless a waiver has been signed by a parent or guardian or a supervising driver is in the passenger seat
- Use of mobile devices is not permitted at any time unless it is permanently installed in your vehicle.
- No more than one minor passenger can be in the car at any time, except family members, for the first six months, unless a parent or guardian has chosen to waive the passenger restriction
There are two ways to obtain a full, unrestricted license in Iowa.
- At 17: after completing 20 hours of supervised driving with the intermediate license, 2 of which must be at night, and after 12 months with the license and a clean record
- At 18: without any requirements
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